NBI SEMINAR MATERIALS: Human Resource Law From A to Z: Unemployment Compensation

I  had the great opportunity to lead (perhaps “teach”) a continuing legal education seminar hosted by the National Business Institute.  The subject was “Human Resource Law From A to Z” and I had opportunity to speak on Unemployment Compensation.  I was joined by other capable attorneys who each had their own topics to present.

Although NBI published the materials, I retain the ownership of the portions I wrote, which I will post here in this blog.

Linked below are all the materials I wrote for this seminar.

Thanks!

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• NBI SEMINAR MATERIALS: General Rules on Who is Entitled to Unemployment Compensation
• NBI SEMINAR MATERIALS: Key Information to Present Regarding the Initial Claim
• NBI SEMINAR MATERIALS: What you Need to Know About the Hearing Process
• NBI SEMINAR MATERIALS: Traditional Ways to Manage Unemployment Compensation Costs

NBI SEMINAR MATERIALS: Traditional Ways to Manage Unemployment Compensation Costs

I  had the great opportunity to lead (perhaps “teach”) a continuing legal educationseminar hosted by the National Business Institute.  The subject was “Human Resource Law From A to Z” and I had opportunity to speak on Unemployment Compensation.  I was joined by other capable attorneys who each had their own topics to present.

Although NBI published the materials, I retain the ownership of the portions I wrote, which I will post here in this blog.

Copied below are the materials I wrote for the section entitled “Traditional Ways to Manage Unemployment Compensation Costs.”

Thanks!

__________

Traditional Ways to Manage Unemployment Compensation Costs

Many employers appear to be under the impression that since they pay unemployment compensation through mandatory taxes, there is little they can do to manage their unemployment compensation costs.  The fact is, however, is that there are a few ways to manage unemployment compensation costs.

The first, and most basic, way an employer can manage unemployment compensation costs is to contest a claim for benefits.  For example, if a claimant is found to have voluntarily quits his employment or commits willful misconduct (see above), the employer is not charged for the benefits, however employers must be proactive at every step – specifically contesting a claim, submitting its forms in a timely fashion to the Department of Labor, appealing an adverse determination and/or attending a referee’s hearing – in order to ensure, to the best of its ability, that it is not charged for benefits.  To that end, providing the Department of Labor complete paperwork, a full description of the cause of the employee’s separation from employment, and supplying additional information as it becomes available is a must.  Similarly, employers are given notice by the Department of Labor of their employees’ base period wages, which can also be appealed in order to avoid an award of benefits being charged to their account.  Being sure to attend all hearings, submitting all documents within time allotted, and appealing adverse decisions can all help reduce costs.

An employer’s tax rate for unemployment compensation depends on the the number and frequency of successful claims for benefits, therefore, successfully contesting benefits can help reduce the applicable tax burden.

If a claimant is successful in securing benefits, an employer may be eligible for relief from being charged for the claimant’s benefits if it properly files for it.  An employer may be relieved of charges if, for example, the claimant was terminated for cause or voluntarily quit, or if the claimant became unemployed due to natural disaster, and/or the claimant is self-employed,

There are also some every day strategies and policies which can be implemented to help manage unemployment compensation costs.

• First, being diligent and careful about who one hires, and ensuring a good work environment, helps ensure employees will have longer terms of employment, and less need for benefits. Relatedly, be liberal about offering leaves of absence as this also reduces the odds of employees quitting.  Keeping turnover to a minimum is the goal.  When employees are terminated (for whatever reason), it may be advisable to conduct an exit interview to document the reason for termination.
• Second, it is vital to maintain complete and detailed employment records. These records include each and every disciplinary issue, work quality issue, and/or personality issue, and the dates of these issues, the names of all involved, the details of the investigation of these issues, and how they were resolved.
• Third, an employer should be sure to furnish its employees with a copy of its employment manual/policies (with signed verification of receipt). So doing ensures all of its employees have had notice of what is expected of them, how discipline is applied and enforced, and what the work rules are.

 

NBI SEMINAR MATERIALS: What you Need to Know About the Hearing Process

I  had the great opportunity to lead (perhaps “teach”) a continuing legal educationseminar hosted by the National Business Institute.  The subject was “Human Resource Law From A to Z” and I had opportunity to speak on Unemployment Compensation.  I was joined by other capable attorneys who each had their own topics to present.

Although NBI published the materials, I retain the ownership of the portions I wrote, which I will post here in this blog.

Copied below are the materials I wrote for the section entitled “What you Need to Know About the Hearing Process.”

Thanks!

__________

Unemployment Compensation hearings are heard by a fact-finder known as a referee.  The hearings are semi-formal in nature, but generally follow typical adversarial hearing procedure.  Perhaps the single most important thing to know about referees’ hearings is that they are the one, and only, opportunity for either party to present evidence, testimony, and argument in support of his position with regard to the claim for benefits.  The referee’s decision is based solely on the file maintained by the Department of Labor and the testimony and evidence offered at the hearing.  It is unfortunately common for parties not to take the referee’s hearing seriously, or believe it is only some sort of preliminary (or intermediate (as opposed to final)) hearing, as it is not in a court or before a judge, however, as stated above, it is actually vitally important as it is the only fact-finding hearing in the unemployment compensation process.  Similarly unfortunate is that claimants are often told by the Department of Labor that they do not need an attorney at the hearing, however, considering how significant the referee’s hearings are to a claimant’s eligibility, it is highly recommended that the parties are represented at them.

Referees’ hearings take place at one’s local Unemployment Compensation hearing office, specifically in the referee’s office.  The hearings are audio recorded and transcribed if appealed to the Board of Review.  The referee’s office makes the complete claim file available to the parties prior to the hearing and, to that end, the parties should appear at least fifteen minutes prior to the hearing to review it.  The file typically consists of the correspondence between the parties and the Department of Labor, the application filed by the claimant, any response made by the employer, the income records from the claimant, and the initial determination of (in)eligibility.

As stated above, the hearing itself takes place in the referee’s personal office.  The arrangement of the room typically consists of the referee’s desk at the front (where the referees’ sits) and a long table perpendicular to the referee where the parties sit on opposing sides (some referees’ office have a traditional courtroom set up with the parties at side-by-side tables facing the referee).  The parties can be accompanied by their attorneys (or non-attorney representative), witnesses, and non-participating observers.  By statute, the parties may have a non-attorney representative instead of a lawyer who functions in a similar capacity as a lawyer.

The hearing begins with the referee reviewing and identifying literally every page in the claim file (which was just reviewed by the parties).  Upon completion of the review, the parties may object to the admissibility of the documents in the claim file.  Typically, the objections are to relevance (for containing information irrelevant to the claim) and hearsay.  It is not uncommon for the documents in the file, especially from the employer, to be written (or prepared) by a non-party who is not present at the hearing.  For example, the employer may appear at a referee’s hearing through its owner and a witness who saw the events giving rise to the employee’s termination.  By contrast, the contents of the file may have been written and/or prepared by the employer’s Human Relations director who is not present at the hearing, and, therefore, the contents would be hearsay.  If the objections are sustained, the documents objected to are not considered when the referee renders his decision.

After the file is reviewed, the hearing commences in a way that follows the traditional procedure of an adversarial hearing.  The hearing typically begins with an opening statement from the parties (some referee’s dispense with this portion of the hearing).  After open statements, the party which appealed the decision calls and examines its witnesses.  Through the witnesses, documents may be submitted as evidence.  The witnesses may be cross-examined by the adverse party.  When finished, the adverse party calls and examines its witnesses.  Closing arguments – if permitted by the referee – are then offered and the hearing concludes.

A very common mistake made by the parties – especially the employer – is not bringing the appropriate witnesses.  For example, employers often assert that a claimant was terminated from his employ due to willful misconduct, which would render the claimant ineligible for benefits.  This same employer may appear at the hearing with the owner and the human relations director as witnesses, neither of whom witnessed the misconduct that gave rise to claimant’s termination.  Unfortunately for the employer, the only testimony they would be able to provide regarding the misconduct is inadmissible hearsay.  So, needless to say, it is vitally important to bring the proper and relevant witnesses to the hearing.

As a referee’s hearing follows traditional adversarial procedures, the parties are free to make various objections as permitted by the rules of evidence.  As a referee’s hearing is semi-formal (similar to a district court (i.e.: small claims) hearing), objections for “best evidence” – and the like – are often not enforced.  Similarly, if a health condition is an issue, it is not necessary to call the physician or health care professional as a witness to ensure medical records are admissible as evidence.  The burden of proof lies with the party making the assertion.  For example, if the claimant was terminated for willful misconduct, the employer bears the burden to prove that it occurred.

A referee’s decision is issued within about two weeks of the hearing and is appealable to the Board of Review by the date listed on the determination/opinion issued by the referee.

NBI SEMINAR MATERIALS: When is it Important to Fight an Unemployment Compensation Claim

I  had the great opportunity to lead (perhaps “teach”) a continuing legal educationseminar hosted by the National Business Institute.  The subject was “Human Resource Law From A to Z” and I had opportunity to speak on Unemployment Compensation.  I was joined by other capable attorneys who each had their own topics to present.

Although NBI published the materials, I retain the ownership of the portions I wrote, which I will post here in this blog.

Copied below are the materials I wrote for the section entitled “When is it Important to Fight an Unemployment Compensation Claim.”

Thanks!

__________

When is it Important to Fight an Unemployment Compensation Claim

As mentioned above, it is not atypical for an initial claim for benefits to be denied.  Two parties can contest an application for benefits: the employer and/or the Department of Labor.

When a claimant applies for benefits, the employer is alerted and is given the opportunity to supply the Department of Labor information about the claimant.  Often the information provided by the claimant matches that of the employer, but sometimes it does not, which could trigger a finding of ineligibility for the claimant.  Other times, the employer specifically provides information to the Department of Labor in order to prevent a successful application for benefits (e.g.: detailing the willful misconduct which led to the termination), which also typically triggers a finding of ineligibility.

There are times when the employer does not provide anything to the Department of Labor (or the information it provided agrees with the claimant), yet the claimant is still found ineligible.  In these cases, the Department of Labor makes a determination based on the application itself and, based on that alone, the claimant is determined to be ineligible.  For example, if the claimant has insufficient benefit weeks, and/or his application makes it appear he quit voluntarily, and/or he has a medical condition rendering him unable to work, then the Department of Labor could determine the claimant to be ineligible based on the information provided on the claimant’s application alone.

When a claimant is found to be ineligible for benefits (or when an employer’s ex-employee is found eligible) and one disagrees with the determination, one has a right to appeal the decision.  As noted above, it is critically important to file the appeal (via email and/or facsimile and/or mail) by the appeal deadline listed on the Notice of Determination, otherwise the appeal will be dismissed without consideration of its underlying merits.

It is almost always important to “fight” (e.g.: appeal) an adverse unemployment compensation determination.  Obviously, a claimant should appeal an adverse determination in order to secure benefits for himself.  An employer should appeal an adverse determination order to keep its costs down by avoiding paying out benefits for the claimant (more on this below).

A timely appeal of an adverse unemployment compensation determination leads to a hearing before a referee.

NBI SEMINAR MATERIALS: Key Information to Present Regarding the Initial Claim

I  had the great opportunity to lead (perhaps “teach”) a continuing legal education seminar hosted by the National Business Institute.  The subject was “Human Resource Law From A to Z” and I had opportunity to speak on Unemployment Compensation.  I was joined by other capable attorneys who each had their own topics to present.

Although NBI published the materials, I retain the ownership of the portions I wrote, which I will post here in this blog.

Copied below are the materials I wrote for the section entitled “Key Information to Present Regarding the Initial Claim.”

Thanks!

__________

Key Information to Present Regarding the Initial Claim

The information provided when making an initial claim ranges from very basic information about one’s employment to the causes of one’s termination from employment.

Nowadays the initial claim is typically done via the Department of Labor’s website, which can be found here: https://www.uc.pa.gov/unemployment-benefits/file/Pages/File%20an%20Initial%20Claim.aspx

Aside from the website, there are other options to apply for benefits:

• By telephone: statewide toll-free number at 1-888-313-7284 (open call hours are 8a.m. – 4p.m. Monday & Tuesday, 12p.m. – 6p.m. Wednesday, 8a.m. – 4p.m. Thursday and Friday from 8a.m. – 12p.m.);
• Services for the deaf and hard of hearing:
• TTY: 1-888-334-4046;
• Videophone: 717-704-8474 every Wednesday from noon to 4p.m.;
• Paper Form: a paper application can be downloaded and mailed to the address indicated on the form.

It is likely obvious, but the basics about one’s employment to include on an initial claim are as follows:

• one’s dates of employ (first day of work, last day of work, and final day on payroll);
• one’s rate of pay on the last day of work;
• the name, address, and telephone number of oneself and one’s employer;
• one’s social security number;
• one’s email address;
• pension or severance package information;
• one’s bank account for the deposit of the benefits (optional);
• one’s own personal identification number (if there has been a prior filing) and the employer’s account number (if known);
• the cause of separation.

Describing one’s cause of separation is critical as certain causes of separation can render one ineligible for benefits (as described above).  As a result, a claimant must be judicious and precise when describing the cause of termination.  Unfortunately, the application only gives a few options (in a pull down menu if applying online) and these options are often overbroad, imprecise, and/or give the wrong impression as to the actual cause of separation.  One may offer an explanatory statement, but claimants often have insufficient space and write without consideration of legal consequences or precision.  Due to the limitations of the application process – and the difficultly claimants have in fully explaining the cause of their termination – it is not uncommon to be denied an initial claim.

NBI SEMINAR MATERIALS: General Rules on Who is Entitled to Unemployment Compensation

I  had the great opportunity to lead (perhaps “teach”) a continuing legal education seminar hosted by the National Business Institute.  The subject was “Human Resource Law From A to Z” and I had opportunity to speak on Unemployment Compensation.  I was joined by other capable attorneys who each had their own topics to present.

Although NBI published the materials, I retain the ownership of the portions I wrote, which I will post here in this blog.

Copied below are the materials I wrote for the section entitled “General Rules on Who is Entitled to Unemployment Compensation.”

Thanks!

__________

General Rules on Who is Entitled to Unemployment Compensation

• Three Aspects of Eligibility

Eligibility for Unemployment Compensation is fairly straight forward.  The key element to keep in mind is that Unemployment Compensation benefits are designed to provide a source of income while someone is between jobs.  To that end, first, as directly implied by the name, one must be recently unemployed.  This is the most basic element of eligibility.  Upon being unemployed, there are three basis factors of eligibility.

First, one must have sufficient income during one’s base year.  A base year is the period of time that comprises the four quarters immediately prior to the quarter that precedes the quarter in which an application for benefits was submitted.  For example: if one’s application is submitted sometime in the months of July, August, and/or September of 2018, then one’s base year begins in April 2017 and ends in March 2018.  One must have sufficient qualifying income during the base year to ensure eligibility; this is calculated as follows: the amount of income required for eligibility is determined by using the base year quarter with the highest income (the so-called “High Quarter”) as a guideline.  In other words, one cannot have earned all of one’s income in a single quarter in the base year to be eligible for benefits.  At least thirty-seven percent (37%) of one’s income must be earned in one or more quarters other than the High Quarter.  For example, if one’s High Quarter was $63,000 then one must have at least $100,000 in total qualifying wages in the base year.  If not, then one would not be eligible for benefits.

Second, one must be available, able, and willing to work.  Being “able” to work in this context is rather literal.  It addresses whether one is physically and/or mentally capable of working.  If one is separated from his employment due to a physical or mental disability or injury and is rendered unable to work at all, one cannot receive Unemployment Compensation benefits as he is unable to work.  As long as the Claimant can work some job, even if it is not the job he left, he can still be eligible for benefits.  To that end, one must be actively engaged in searching for a job.  Relatedly, if one refuses suitable work when it becomes available, then one is rendered ineligible for benefits.

Third, and perhaps counter intuitively, how to determine eligibility is, perhaps, best explained by elucidating what makes one ineligible for benefits.

The most common causes of ineligibility are: (1) voluntary termination; (2) willful misconduct; and, (3) being an independent contractor (and/or self-employed).

 

• Voluntary Termination

Voluntary termination of one’s employment refers to someone quitting his job.  One cannot voluntarily quit his employment and collect benefits.  Put conversely, one has to be terminated from employment involuntarily.  Customarily, an involuntary termination is due to things like a furlough or lay off, downsizing, and/or an employment relationship that simply did not work out.  By contrast, a voluntary quit typically refers to things like quitting to take a new job, to go to school, to retire, and/or to move to a new locale, among other things.  If someone voluntarily terminates his own employment, then he is ineligible for benefits.

Three general exceptions to “voluntary termination” as described above are a hostile work environment, a change in working conditions, and a disability of some sort (as described above).

For example, if someone is a target of sexual harassment, discrimination, or even general mistreatment, and feels compelled to quit to escape the hostile work environment, then such termination would be considered constructively involuntary.  In other words, even though on its face it appears the employee quit his job voluntarily (as he was not fired or laid off, etc), if the working environment is so bad that a reasonable person could no work in it, the quit is considered involuntary as no one should be expected to work in such conditions.

Second, a change in working conditions includes things like a significant change in location, hours, or compensation.  For example, if the location of one’s job moves fifty (50) miles away, then that would be a substantial change in location to render continued employment extremely difficult if not impossible.  Quitting one’s job due to such a relocation is not considered voluntary.  An important caveat to this general rule applies when someone, despite the relocation, elects to try and tough it out for a time.  If someone continues to work for an extended time despite the relocation, his eventual quit could be considered voluntary (and render the employee ineligible for benefits) as the relocation did not make it immediately impossible to work.  Similarly, being laid off due to the work being seasonal, or due to a work lock out, constitutes involuntary termination rendering the claimant eligible for benefits.  Relatedly, if someone quits his job to accept another, better, job (or part-time to full-time) and that new job unexpectedly falls through, then that would not constitute a voluntary quit.

It is important to keep in mind that quitting one’s job to go to school, accept a retirement buy out, look for other work, start a business, and/or participate in a union strike, constitutes voluntary termination to render one ineligible for benefits.

Finally, as briefly mentioned above, there are times when a physical or mental disability or injury causes one to be unable to perform his job.  If that disability/injury renders one unable to work any job, then one is ineligible for benefits; however, if that disability/injury renders one unable to work one’s current job, but still able to work others, then one could be eligible.  For example, if someone is a construction worker, and hurts his foot and cannot stand for long periods of time, he may have to leave his construction job, but could work another job where he could sit (e.g.: a desk job).  In this case, his quitting the construction job would be considered involuntary (as he would still work there but for the injury), but as he is still able to work, he is eligible for benefits.

 

• Willful Misconduct

As mentioned above, being involuntarily terminated is an element of being eligible for benefits, and forms of involuntary termination include furlough or lay off, downsizing, and/or an employment relationship that simply did not work out.  By contrast, however, another form of involuntary termination, which does not lead to eligibility, is termination due to willful misconduct.  To put it in more common parlance, one is not eligible for benefits if he is fired for cause.  Willful misconduct is rather self-explanatory: it is to willfully break a work rule and get fired as a result.  If this occurs, the employee who is terminated due to willful misconduct is ineligible for benefits.  There are a couple of narrow exceptions to ineligibility due to willful misconduct.  First, if the misconduct is not particularly egregious, and only happened once, then it is possible to be eligible for benefits despite the termination for the misconduct.  Second, if the misconduct was the result of mistake or error, then it would not be considered “willful” and, therefore, the terminated employee could be eligible.  Third, if the work rule that was broken is inconsistently applied or enforced, then it is possible a termination based on that rule would not be considered willful misconduct as a result.  Finally, if violating the work rule was for a good or justifiable reason, it would not be considered willful misconduct.  For example, a delivery company may have a rule prohibiting its trucks from being used for personal reasons.  If a driver of one of those trucks had a medical emergency, or, say, learned that his child was having a medical emergency, and diverted from his route due to that emergency, one could argue that the breaking of the rule was not “willful,” but rather due to a reasonable response to an emergent situation.

 

• Employee or Contractor?

In order to be eligible for benefits, one must have been someone else’s employee.  If someone is self-employed, or is an independent contractor, then one is not, or has not, been someone else’s employee and, therefore would not be eligible for benefits if the work being done by that person is somehow terminated or concluded.

The obvious question is how one can determine if someone is an employee or a contractor (or self-employed).  Some (alleged) employers do not maintain a payroll (but pay their workers through standard checks instead), and some do not pay for supplies, while still others provide little oversight.  What is the status of those who work for these alleged employers?

In order to determine whether someone is an employee or a contractor, the Pennsylvania Courts use the following two-part test to determine whether an individual is self-employed (i.e.: independently contracting): (1) is the claimant free from control and direction in the performance of the work? and, (2) is the business one that is customarily engaged in as an independent trade or business?

To determine whether an individual is free from the control and direction of an employer in the performance of work, the Unemployment Compensation referees and Pennsylvania Courts frequently look to eight (8) factors.  No one factor is determinative as to whether an individual is an employee or independent contractor, and the Court generally considers and weighs all eight (8) factors in the employment relationship.

The eight (8) factors that are considered are as follows: first, how was the job was performed?  Specifically, it is more likely that an individual is an independent contractor if he sets his own hours, creates his own work/task agenda, and/or decides how many other workers are needed for a particular task.  Second, is there was a fixed rate of remuneration?  Who decides the cost of the services being provided?  Who decides when/if raises are granted?  A worker who establishes his own pay rate and decides when his own pay rate increases or decreases is functioning more like an independent contractor than employee.  Third, are taxes deducted from the claimant’s remuneration?  It is more likely that a worker is an independent contractor if the worker receives a 1099 form and is able to deduct expenses and be responsible for paying his own taxes.  Fourth, does the alleged employer supply the tools necessary to carry out the services being provided?  If the worker must provide and use his own tools to carry out his tasks, it is more likely to rule that the worker is an independent contractor.  Fifth, does the alleged employer offer on-the-job training?  If an alleged employer provides on-the-job training, it is more likely to rule that there is an employment relationship.  Sixth, are there regular meetings with the alleged employer?  Regular meetings generally will signify an employment relationship.  Seventh, will the claimant suffer risk of loss when claimant’s expenses exceed income?  In other words, if the business fails, will the alleged employee merely lose his job, or will the alleged employee have the responsibility to satisfy the business’ potential creditors.  If the alleged employee merely loses his job, and has no responsibility to address the business’ creditors, then it is likely that he is an employee rather than an independent contractor.  Eighth, is the claimant compelled to look only to the employer for further employment?  If a worker regularly sought and/or acquired the same or similar work from other sources, while already engaged with an alleged employer, then it is likely that the worker had independent contracting relationships with his employers.

The explanation typically given for why a self-employed person would not be eligible for benefits is the risk of benefits fraud through the hiring and firing of oneself in order to collect benefits.

One minor exception to the above is the so-called “sideline activity.”  It is not uncommon for someone to work a full time job as an employee but, in his spare time, earn a few extra dollars doing a sideline activity.  For example, someone could work a typical 9am to 5pm, Monday through Friday, job, but on the weekends work a few hours doing landscaping or wedding photography or the like as a sideline activity.  If this person lost his day job involuntarily, his sideline activity would not cause him to be ineligible due to self-employment.  Relatedly, losing the sideline activity would not constitute being unemployed sufficient to be eligible for benefits.  The main pitfall regarding a sideline activity is if the hours spent at that activity expands beyond being merely a “sideline,” and into one’s primary source of income.  The typical situation where this would occur is if one loses a day job and, in order to cover one’s bills and expenses, expands out the sideline activity to more hours.  Suddenly, a sideline activity – which would have no effect on eligibility – would convert someone into being self-employed and, therefore, ineligible for benefits.

It is worth noting that, by statute, someone who works for a religious institution (e.g.: a clergyman), someone who works some agricultural jobs, and someone who works for family, among a handful of other categories, are not eligible for benefits regardless of how or why they are terminated from employment.

Finally, unemployment compensation follows strict deadlines.  If one misses an appeal deadline – even by one day – it will render the claimant ineligible for benefits for the benefit weeks for which the benefits are applied.

A Collection of Unemployment Compensation Law Writings by James W. Cushing, Esquire

Over the course of my career, I have written extensively on a wide variety of unemployment compensation law issues and legal principles.  These writings have been published in The Legal Intelligencer, Upon Further Review, and The Pennsylvania Family Lawyer as well as posted onto my blog.  I have collected these articles and blog posts and have listed them below.  Thanks for reading!

Articles:

• Employed or Not Employed? That Is the Question
• Unemployment Compensation Ruling Cannot be the Basis for Collateral Estoppel
• Coordinating Unemployment Compensation With Severance Packages
• Unemployment Compensation Isn’t Very Charitable
• Accepting Voluntary Layoff Is Now Involuntary Termination
• Alcohol Putting Unemployment Compensation to the Test
• Is Working on the Sidelines Out of Bounds for UC?
• Peril of Losing Benefits While Vacationing Unemployed
• Proving Willful Misconduct in UC Cases: Specificity Required!
• The Effect of Retiring on Workers’ Compensation Benefits
• A Look at Recent Unemployment Compensation Cases
• Is It A-OK Withdrawing From a 401(k) for UC?
• More Work for Unemployment Compensation Lawyers in the Near Future?
• The Benefits from Sleeping on the Job
• Trouble on the Horizon – Severance Agreements and Recent Modifications to the Pennsylvania Unemployment Compensation Law
• Double Dipping: Unemployment Compensation and Other Benefits
• The Hidden Inequity in Unemployment Compensation Law

Blog Posts:

• The Secret to Unemployment Compensation Defense
• Unemployment Compensation Over Payment Cases – Fault or No Fault?
• Unemployment Compensation Hearings: Best Evidence Rule Not So Great
• NBI SEMINAR MATERIALS: General Rules on Who is Entitled to Unemployment Compensation
• NBI SEMINAR MATERIALS: Key Information to Present Regarding the Initial Claim
• NBI SEMINAR MATERIALS: What you Need to Know About the Hearing Process
• NBI SEMINAR MATERIALS: Traditional Ways to Manage Unemployment Compensation Costs
• NBI SEMINAR MATERIALS: Human Resource Law From A to Z: Unemployment Compensation

Unemployment Compensation Over Payment Cases – Fault or No Fault?

People who are out of work often have the option to file for, and collect, unemployment compensation benefits to help fill the gap, financially speaking, until they can secure new employment.  As one may expect, however, not everyone who applies for benefits are eligible to collect them.  Ineligibility for benefits can be caused by a variety of factors including, but not limited to, issues regarding self-employment (see here and here), conflicts with other benefits (see here and here), conflicts with retirement (see here and here), issues surrounding termination due to willful misconduct (see here and here and here), issues surrounding whether one voluntarily quit (see here), and/or issues regarding whether one is available for work (see here).

Now, there is a delay between one’s application for benefits and a ruling that one is ineligible and, very often, during that interval a claimant will receive benefits.  If, after receipt of benefits, it is determined that the claimant was ineligible, then the benefits he received would be considered, retroactively, an over payment to him as he ought not have received them in the first place due to being declared ineligible.

The obvious question here is this: what is the consequence to receiving benefits to which one is not entitled?  There are two possible results based on a finding of the claimant’s intentions when his application for benefits were made.  Were the claimant’s intentions “innocent” (in that he acted honestly with Unemployment Compensation at all times) when he applied for benefits which, as a result of the same, he was granted benefits inadvertently?  Or, were did the claimant act with deception or fraud when applying for benefits which resulted in him being dishonest with Unemployment Compensation?

For example, the Claimant honestly may not have fully understood the legal distinctions between “employee” and “contractor” (see here) when he applied for benefits or he honestly may not view the conduct which led to his termination as willful misconduct (see here and here and here) or he honestly may not have fully understood the interplay between Unemployment Compensation benefits and other benefits (see here and here) or he honestly may not view his termination from employment as voluntary (see here).  If this is the case, then his over payment would be considered to have been caused by no fault of the Claimant’s own

By contrast, the Claimant, when applying for benefits, may have intentionally lied about the cause of his termination, or lied about the status of his side job, or intentionally obscured his other sources of income (e.g.: workers’ compensation benefits).  If this is the case, then his over payment would be considered to have been the result of the Claimant’s act of deception and, therefore, brought about by a fault of his own.

If the Claimant’s over payment is due to no fault of Claimant’s own (as described above), the consequence is that if he were to collect unemployment compensation at any time over the following three years, his benefits will be deduced by the amount of the over payment as paid through monthly installments.  If the Claimants over payment is due to Claimant’s fault (as described above), the consequence is that the Claimant must immediately repay all of the benefits at pain of penalties, interest, and other sanctions.

Now, like nearly all things in in the American legal system, determining whether the Claimant was overpaid, and whether that over payment was due to the fault of the claimant (as described above), is determined at a hearing after the presentation of evidence and testimony.  Sometimes this can be done at a single hearing but, more often than not, two hearings will be held: the first to determine eligibility and the second (if the claimant is found ineligible) to determine whether any payments he received were due to his fault (as defined above).  Most of the time, Claimants do their best to fill out the application for benefits and simply do not know how certain terms are used and/or have a different view of the facts surrounding their termination from employment, and, as a result, they will not be required to repay their over payments.  Occasionally, however, a Claimant actively tries to deceive Unemployment Compensation and, for that, immediate repayment will be due.

Unemployment Compensation Hearings: Best Evidence Rule Not So Great

Unemployment Compensation Referee’s hearings, due to their nature as administrative hearings and of limited scope, traditionally have allowed a somewhat lax application of the Pennsylvania Rules of Evidence.  For the most part, this tends toward keeping the hearings fast moving, relatively inexpensive to litigate, efficient, and to the point.  I stress the word “lax,” as opposed to say “eliminated,” as the rules of evidence are not disposed of or vitiated, but simply given common sense application to a quasi-judicial hearing regarding the very narrow issue of whether one is entitled to receive government benefits during one’s unemployment.

For the most part, easing up on the rules makes a lot of sense as litigants, especially the newly cash strapped claimant, has not got the money to call in experts, subœna extensive records, or find and secure multiple witnesses.  Indeed, such an approach would seem to only serve to mud up the gears of an already overburdened Department of Labor regarding such generally simple issues.  So, for example, some flexibility on hearsay is allowed, as well as allowing the admission of medical records without a medical expert, or even allowing some “narrative” testimony, if only for the practical purpose of bringing these matters to a relatively speedy and efficient close.

I think the general flexibility on the rules of evidence makes some sense and I generally do not have a problem with it, especially since I have never had an experience where the flexibility in the rules centered on the main issues or any dispostive aspect of the many cases I have handled.  Actually, allow me one caveat on that statement: when a Referee’s laxity on the rules on a central issue causes me to lose a case, I have had pretty consistent success in having the decision overturned by the Board of Review on appeal.

So, why am I writing all of this?  Let us focus on a specific rule of evidence, specifically Rule 1002, which reads as follows:

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An original writing, recording, or photograph is required in order to prove its content unless these rules, other rules prescribed by the Supreme Court, or a statute provides otherwise.

Comment: Pa.R.E. 1002 differs from F.R.E. 1002 to eliminate the reference to Federal law. This rule corresponds to the common law “best evidence rule.” See Hera v. McCormick, 425 Pa. Super. 432, 625 A.2d 682 (1993). The rationale for the rule was not expressed in Pennsylvania cases, but commentators have mentioned four reasons justifying the rule. (1) The exact words of many documents, especially operative or dispositive documents, such as deeds, wills or contracts, are so important in determining a party’s rights accruing under those documents. (2) Secondary evidence of the contents of documents, whether copies or testimony, is susceptible to inaccuracy. (3) The rule inhibits fraud because it allows the parties to examine the original documents to detect alterations and erroneous testimony about the contents of the document. (4) The appearance of the original may furnish information as to its authenticity.

5 Weinstein & Berger, Weinstein’s Evidence § 1002(2) (Sandra D. Katz rev. 1994).

The common law formulation of the rule provided that the rule was applicable when the terms of the document were “material.” The materiality requirement has not been eliminated, but is now dealt with in Pa. R.E. 1004(d). That rule provides that the original is not required when the writing, recording or photograph is not closely related to a controlling issue.  The case law has not been entirely clear as to when a party is trying “to prove the content of a writing, recording, or photograph.” However, writings that are viewed as operative or dispositive have usually been considered to be subject to the operation of the rule. On the other hand, writings are not usually treated as subject to the rule if they are only evidence of the transaction, thing or event. See Hamill-Quinlan, Inc. v. Fisher, 404 Pa. Super. 482, 591 A.2d 309 (1991); Noble C. Quandel Co. v. Slough Flooring, Inc., 384 Pa. Super. 236, 558 A.2d 99 (1989). Thus, testimony as to a person’s age may be offered; it is not necessary to produce a birth certificate. See Commonwealth ex rel. Park v. Joyce, 316 Pa. 434, 175 A. 422 (1934). Or, a party’s earnings may be proven by testimony; it is not necessary to offer business records. See Noble C. Quandel Co., supra.  Traditionally, the best evidence rule applied only to writings, but Pa.R.E. 1002 may be applicable to recordings or photographs. However, recordings and photographs are usually only evidence of the transaction, thing or event. It is rare that a recording or photograph would be operative or dispositive, but in cases involving matters such as infringement of copyright, defamation, pornography and invasion of privacy, the requirement for the production of the original should be applicable. There is support for this approach in Pennsylvania law. See Commonwealth v. Lewis, 424 Pa. Super. 531, 623 A.2d 355 (1993) (video tape); Anderson v. Commonwealth, 121 Pa. Cmwlth. 521, 550 A.2d 1049 (1988) (film).

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This rule is commonly known as “the best evidence rule,” and, as you can see it, more or less, requires the best available version or copy (or what have you) of a piece of evidence is to be produced at a hearing as opposed to a duplicate.  So, for example, an original signed copy of a contract is always preferred to a duplicate.  The way this rule would be employed is if an attorney, through his witness, attempts to introduce that copy as evidence.  The opposing attorney would object on the basis that the copy is not “the best evidence” and the judge would rule on whether it was.  If it was not the best evidence, the objection would generally be sustained and the document would be inadmissible.

I recently had a case before an Unemployment Compensation Referee in Philadelphia.  The opposition (the employer) attempted to introduce a Collective Bargaining Agreement (which laid out relevant issues to the case I was handling) into evidence.  The copy of aforesaid Agreement presented by the employer did not contain a signature from the employer!  I objected to the admission of the Agreement on the basis that it was not the best evidence; a contract with no signature is hardly a contract!

The Referee’s ruling on my objection was quite startling and is the inspiration of this article.  I would not have been surprised if my objection was overruled on the basis of the above-mentioned need for efficiency or something like that; for example, the Referee could have said that the employer’s testimony identified the copy of Agreement as being a true and accurate copy of the original Agreement executed by, and applicable to, both parties regardless of whether the signatures were present.  Unfortunately, that is not what the Referee ruled.  He ruled that, by order of his superiors within the Department of Labor, the best evidence rule will no longer be applied at unemployment compensation hearings and, therefore, any objections made on that basis will be overruled.

I was absolutely shocked!  Suddenly practical laxity has declined into total abdication and ignorance of clearly established rules of evidence.

So, let this article forewarn any of you who practice Unemployment Compensation Law: the best evidence rule is currently, and indefinitely, in abeyance at Referee’s hearings in Pennsylvania.

The Secret to Unemployment Compensation Defense

I have litigated dozens, if not hundreds, of unemployment compensation cases.  I represent both claimants and employers but I more frequently represent claimants.  I think it is fair to say that claimants are more likely to win an unemployment compensation case against an employer due the nature of the law, but I think employers could increase their chances of success if they just spent a little more time and effort pursuing, preparing, and presenting their cases.

When I represent claimants I object pretty aggressively to the testimony, documentation, and evidence presented by employers mainly because they almost always are, to some degree if not totally, hearsay.  I think my success in representing claimants is due, at least to some degree, in preventing the employer’s evidence from being presented.

Now, I admit that I don’t want to give my opponents any advantages, but I think some very basic things could go a long way for employers.  Employers just do not present sufficient competent evidence to win.  Documentation, as much as is relevant, is always helpful.  When wondering whether to bring something, it is always wiser to bring it and not need it than the opposite.  Unfortunately, much of the documentation brought as evidence contains the statements of people who do not appear at the unemployment compensation hearing and is, therefore, hearsay.

This leads me to the single biggest error made by employers at unemployment compensation hearings, which is their failure to bring witnesses.  If an employer wishes to have documentation with the statements of others introduced into evidence at an unemployment compensation hearing, then the employer must bring the person(s) who made the statements to the hearing to provide testimony as to the statements in the documentation.  Furthermore, if someone is terminated for cause, then a witness to the incident(s) of misconduct giving rise to the termination is critical to win an employer’s case.  Many employers will bring the “boss,” whether that is the C.E.O. or president or manager or what have you, as a witness.  The problem is that the boss is usually too disconnected to have any personal knowledge of the claimant’s alleged misconduct which gave rise to his termination.  Therefore, any testimony from the boss about the misconduct is hearsay.

Another typical mistake is to bring the human relations person to the hearing.  The same problem with the boss applies to the HR person.  While the HR person can certainly introduce documentation in a person’s employee file, this person too is almost always too disconnected from the claimant’s alleged misconduct to have personal knowledge of it; as a result his testimony is hearsay as well.

When it comes down to it, an employer must bring sufficient witnesses who have personal knowledge of the issues at hand to win its case, otherwise employers will consistently be at a disadvantage at unemployment compensation hearings.