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 Ruling Cannot be the Basis for Collateral Estoppel

Many cases sounding in employment law involve other related parallel matters like unemployment compensation. Applicants for unemployment compensation, and their employers, engage in a legal administrative process wherein they make allegations and, fairly frequently, have to testify on the record at a hearing before a referee which can be reviewed by the Unemployment Compensation Board of Review and Commonwealth Court of Pennsylvania. Based on the evidence presented, findings of facts and law are made during the unemployment compensation process relative to the applicant’s eligibility for unemployment compensation benefits.

The legal doctrine of collateral estoppel, sometimes called “issue preclusion,” serves to prevent a litigant from re-litigating issues which have been the subject of a finding of fact and/or law in a prior litigation. The recent case of Mathis v. Christian Heating and Air Conditioning, Inc. 91 F.Supp.3d 651 (U.S.E.D.PA 2015) addresses whether findings of fact and/or law during unemployment compensation litigation can serve as the basis for collateral estoppel in court.

In Mathis, the District Court finds itself ruling upon what is, in effect if not in name, a motion to reconsider its ruling granting a motion to dismiss. The Plaintiff in Mathis is a self-described atheist, while the Defendant, Christian Heating and Air Conditioning (“CHAC”), is a company owned and operated explicitly as a Christian company.

As part of its work rules, all employees of CHAC are obliged to wear an identification badge with CHAC’s mission statement which reads as follows: “This company is not only a business, it is a ministry. It is set on standards that are higher than man’s own. Our goal is to run this company in a way most pleasing to the lord [sic].” Plaintiff alleges that people from CHAC would regularly make comments to him about his lack of religious belief and insist he attend church. Further, as it conflicted with his atheistic beliefs, he covered the above-quoted mission statement on his identification badge with a piece of tape. According to Plaintiff, his superior at CHAC informed him that the mission statement cannot be covered and refusing to remove the tape would result in his termination. Plaintiff refused to remove the tape and was promptly terminated.

Plaintiff, upon termination, filed for unemployment compensation benefits. An employee who voluntarily quits his employment is ineligible for unemployment compensation benefits. During the unemployment compensation process, a finding of fact was made by Unemployment Compensation that CHAC told Plaintiff that he could remove the tape on his badge and continue his employment, or leave and terminate his employment relationship with CHAC. Plaintiff then chose to leave instead of removing the tape. As a result, it was found that, for purposes of unemployment compensation, Plaintiff’s termination from CHAC was the result of Plaintiff’s voluntary decision to quit his employment with CHAC.

Plaintiff also filed charges against CHAC with the Equal Employment Opportunity Commission and Pennsylvania Human Relations Commission on the basis of employment discrimination based on religion which resulted in Plaintiff receiving his right to file suit against CHAC in federal court, which he did, giving rise to the Mathis matter.

CHAC argued that Plaintiff’s discrimination claims were all barred by collateral estoppel as these same allegations were made in the context of the unemployment compensation litigation which made specific findings of fact upon which a ruling was entered against Defendant. Specifically, CHAC filed a motion to dismiss Plaintiff’s claims on the basis that the unemployment litigation found he was not terminated due to religious discrimination but, rather, he voluntarily quit his job with CHAC. Based on the collateral estoppel argument, the Court granted CHAC’s Motion to Dismiss in part, ruling that Plaintiff was barred by collateral estoppel from re-litigating issues essential to his failure to accommodate his atheism claim. Plaintiff also made a retaliation claim (which is a separate issue from that described herein) against CHAC which survived the motion to dismiss.

After the Court’s ruling on the aforesaid motion to dismiss, Plaintiff discovered a Pennsylvania law which directly applied to his case as described above. As a result, Plaintiff filed what was, in essence (though not in name), a motion for reconsideration in light of the newly discovered law.

Plaintiff uncovered 43 P.S. Section 829 which reads as follows: “No finding of fact or law, judgment, conclusion or final order made with respect to a claim for unemployment compensation under this act may be deemed to be conclusive or binding in any separate or subsequent action or proceeding in another forum.”

To put it simply, the above-quoted law specifically states that any findings of fact or law in unemployment compensation litigation simply cannot be used as the basis for a collateral estoppel argument and/or defense.

In light of the clear terms of 43 P.S. Section 829, the Court reconsidered its granting of CHAC’s motion to dismiss by reversing its decision and denied it in toto to allow all of Plaintiff’s claims against CHAC to move forward.

Originally published on February 24, 2016 in Upon Further Review and can be found here.

The (Unemployment Compensation) Benefits of Not Minding One’s Own Business

The discernment of who is or who is not an independent contractor for the purposes of unemployment compensation has become more refined per the recent Commonwealth Court matter of Staffmore v. Unemployment Compensation Board of Review, 92 A.3d 844 (Pa.Cmwlth. 2014).

The Claimant for unemployment compensation benefits went through a series of appeals and reversals until he found himself before Commonwealth Court. The Claimant was found ineligible for benefits by the Unemployment Compensation Service Center, but that decision was reversed after an appeal to, and hearing before, an unemployment compensation Referee. The Employer appealed to the Unemployed Compensation Board of Review which reversed the Referee’s decision. The Claimant filed for reconsideration which resulted in reversal of the Board’s decision. That decision was reversed after the Employer filed for reconsideration. However, after reviewing the case again, the Board found in favor of the Claimant, which led to the Employer appealing to the Commonwealth Court.

The Employer is a staffing service which provides workers to agencies for the care of children. Claimant worked for the Employer as therapeutic support staff. He was free to accept or reject clients, he signed an independent contract agreement, he was supervised by a behavioral specialist, who was not an employee of Employer but developed a treatment plan Claimant was obliged to follow. Claimant only worked seven (7) hours per week providing services for a single client. Claimant worked in the education field while he also worked for the Employer. Eventually, Claimant’s client no longer needed further services and Claimant subsequently advised the Employer that he would not accept any further assignments from the Employer.

It was uncontested that Claimant was free from the Employer’s control. The only issue before the Court was whether Claimant was customarily engaged in an independently-established trade, occupation, profession and/or business. If he was, he would be ineligible for unemployment compensation benefits as he would be an independent contractor. Of course, the Court made it clear that unemployment compensation law is to be construed and applied liberally in order to ensure the broadest possible availability of benefits.

In its review of the case law, the Court noted that a worker is an independent contractor only if he is in business for himself. To that end, he must be customarily engaged in an independently established trade, occupation, profession, or business. The Court was clear that the Employer bears the burden to supply evidence of Claimant’s engagement in an independent business.

Although the Claimant was free from the control of the Employer, he testified that he was never, at any relevant time, customarily engaged in the business of providing therapeutic support. Claimant testified that his primary source of income, and indeed his chosen field, was working in education, not as therapeutic support staff, and never held himself out as being available for employment by anyone else other than Employer. Significantly, the Employer provided no evidence that Claimant provided comparable services to any other business or entity.

Based on the above, the Court found that the Employer simply did not provide sufficient evidence to prove that Claimant was engaged in an established business; however, the Court was concerned that Claimant testified that he appeared to have quit his position with the Employer. Consequently, the Court ruled that while Claimant may be eligible for benefits as he was not self-employed, he could be ineligible due to having voluntarily quit. As a result, the Court remanded the case back to the unemployment compensation referee to elicit more information on the circumstances of Claimant’s termination of his employment with the Employer.

Originally published on December 28, 2015 in Upon Further Review and can be found here.

Coordinating Unemployment Compensation With Severance Packages

When one applies for unemployment compensation, it is important to coordinate said application based on when one’s severance package expires and whether one is still within one’s base year, which is the length of time preceding an application for unemployment compensation.  The base year and one’s income earned over that period of time determines the calculations of the amount of one’s unemployment compensation benefits (see 43 P.S. §753(a)).  A credit week is a week within a base year where an employee (i.e.: a claimant for unemployment compensation benefits) has worked and earned above a specific threshold income (see 43 P.S. §753(g.1)).  In order to be eligible for benefits, one must receive employment income for a minimum of eighteen (18) credit weeks within a base year (see 43 P.S. §804(c)).

 

43 P.S. § 804(d)(1)(iii) states the following: “[n]otwithstanding any other provisions of this section each eligible employe who is unemployed with respect to any week ending subsequent to July 1, 1980 shall be paid with respect to such week, compensation in an amount equal to his weekly benefit rate less the total of … the amount of severance pay that is attributed to the week.”  In other words, when one applies for unemployment compensation benefits one must report the income received from a severance package and that income is deducted from the unemployment compensation benefits if they are collected simultaneously.

 

A severance package can be paid over time or in a lump sum.  If it is paid over time, usually in consecutive payroll periods, each week one receives a severance payment, said payment is considered income for a credit week which goes toward the unemployment compensation claimant’s base year, and this should be considered and accounted for before a claim for unemployment compensation benefits is made.  If the severance payment is received as a lump sum, the Court and the Department of Labor have tended to aggregate the severance on a pro-rata basis based on one’s typical earnings.  By example, if someone earns $1,000 per week, a $10,000 severance payment would be considered a ten (10) week severance.  (See: Ross v. Commonwealth of Pennsylvania, Unemployment Compensation Board of Review, 127 Pa.Cmwlth. 457 (1989)).

 

“Severance pay” is considered to be one or more payments made by a employer to an employee due to an employee’ separation from employment (without regard to whether the employer is contractually obligated to provide the pay).  Severance specifically does not include payments from a pension, retirement package, or accrued leave and/or supplemental unemployment benefits.  The law, pursuant to Section 43 P.S. §§ 804(e)(1)(2)(ii) and 804(d)(1) of the Unemployment Compensation law, lays out how severance packages are calculated and attributed for the purposes of benefits.

 

Based on the above, it would seem, in most cases, that the best time to apply for unemployment compensation benefits is after the expiration of one’s receipt of a severance package. As receipt of a severance package counts toward one’s base year, waiting until after the package is fully paid will not affect one’s eligibility for unemployment compensation benefits.  Furthermore, waiting until after one’s severance is paid avoids having one’s benefits deducted by the value of the severance package.  Instead, waiting until the severance package is fully paid before applying for benefits allows one to potentially receive the full severance package and a full complement of unemployment compensation benefits.  On the other hand, one ought not wait too long after the severance package expires before applying for benefits.  Regardless of the source or type of income one receives, one must always have at least eighteen (18) credit weeks within a base year to be eligible for benefits, and benefits always begin upon application for them not on one’s last day of work or receipt of the last severance payment.

Originally published in The Legal Intelligencer Blog on October 23, 2015 and can be found here.

Unemployment Compensation Isn’t Very Charitable

A typical unemployment compensation matter is rather straightforward. The employer pays the unemployment compensation tax for each employee and the employee, if separated from employment through no fault of his own and if he has worked sufficient benefit weeks, applies for and receives benefits. This fairly typical scenario is significantly different when the employer is a not-for-profit entity.

If the employer is not-for-profit, while it is, with exception for the below, obliged to contribute toward unemployment compensation taxes, it is not obliged to do so with regularity per employee as with a typical employer. Instead, a not-for-profit entity has two other options available to it in order to accommodate the fact that it does not make a profit and may not have many assets to contribute toward the tax.

First, the not-for-profit entity can elect to use the “contributory method.” Under the contributory method, the employer must pay its unemployment compensation taxes quarterly and for the first $8,750 of each employee’s compensation, at a rate specified by the unemployment compensation law which can be found on the Pennsylvania Department of Labor’s website.

Second, the not-for-profit entity can elect to use the “reimbursable method”. Under the reimbursable method the employer must simply reimburse the Unemployment Compensation Fund, dollar-for-dollar, for the benefits outlaid. The reimbursement must be paid on a monthly or quarterly basis or else the not-for-profit employer will be switched to the contributory method.

Now, if the not-for-profit entity is a religious organization, it, pursuant to 43 Pa.C.A. Section 753(l)(4)(8)(a), is subject to a religious exemption and need not pay into the unemployment compensation fund at all but, as a result, none of the employees who work for that religious organization are able to collect unemployment compensation benefits regardless of the cause or reason for their termination and/or separation from employment. The aforesaid statute indicates that the religious organization exemption only applies to houses of worship, associations of the same, and/or entities which function and/or operate and/or are supported and/or controlled by the same which exist primarily for religious purposes. In applying this statute, cases such as Imani Christian Academy v. Unemployment Compensation Board of Review, 42 A.3d 1171 (Pa. Cmwlth. 2011) make it clear that an entity such as an even a religious school would likely not be eligible for the exemption as the a school’s primary purpose is education as opposed to religion. The law is clear that an entity’s primary focus must be religion in order to receive the exemption.

The rules and law for unemployment compensation are generally applicable to most employers, however if the employer at issue is a not-for-profit entity and/or a religious organization, it must be aware of the special rules and guidelines which apply specifically to them.

Originally published on May 14, 2014 in The Legal Intelligencer Blog and can be seen here.

Accepting Voluntary Layoff Is Now Involuntary Termination

Decades of Pennsylvania law concerning eligibility for unemployment compensation after accepting an early retirement package has been overturned in the recent landmark Pennsylvania Supreme Court case of Diehl v. Unemployment Compensation Board of Review, 57 A.3d 1209

In Diehl, the Plaintiff, a sixty-three (63) year old man with twenty-three (23) years’ seniority with his employer, was given a memorandum from his employer which included a list of twenty (20) employees who would be laid off pursuant to a reduction-in-force; but Plaintiff was not on the aforesaid list. The employer also offered employees over the age of sixty (60) an early retirement program, for which Plaintiff was eligible. Plaintiff accepted the early retirement program and effectively quit his position with employer as a result; he subsequently applied for unemployment compensation benefits.

Plaintiff was ruled to be ineligible for benefits at every level of the litigation of this matter, prior to the Supreme Court’s decision which is the subject of this article. The reasoning of the lower decision-makers’ was based on Plaintiff’s voluntarily accepting the early retirement program which effectively served as a voluntary termination of his employment without a necessitous and compelling reason to do so. Plaintiff was not on the above-mentioned list and he was not compelled to accept the early retirement package, and there was no threat of termination by his employer, if he didn’t accept it.

The Supreme Court’s legal analysis centered upon the Voluntary Layoff Option Provision portion of 43 P.S. Section 802(b) which states the following: “[p]rovided further, [t]hat no otherwise eligible claimant shall be denied benefits for any week in which his unemployment is due to exercising the option of accepting a layoff, from an available position pursuant to a labor-management contract agreement, or pursuant to an established employer plan, program or policy.”

As one would expect, the tribunals below the Supreme Court cited to multiple cases over the last three (3) decades which would lead to the necessary conclusion that Plaintiff is ineligible for benefits due to voluntarily terminating his employment without a necessitous and compelling reason. These cases tend to focus on a judicially created distinction between early retirement and a voluntary layoff, with only the former allowing eligibility for benefits. However, the Supreme Court pointed out that, despite the long history of reasonably consistent decisions, it was apparent that none of other courts and tribunals actually read the statute they were applying and upon which they ruled.

The Supreme Court began its analysis of the decisions below by identifying an underlying interpretive framework for unemployment compensation which requires viewing the unemployment compensation law as liberally as possible in order to provide the maximum benefits possible. Furthermore, the Supreme Court pointed out that when attempting to apply a statute, courts must abide by the letter of the law when the language of the statute is clear and free from ambiguity using the common and approved usage of the words. As a result, the Supreme Court concluded that benefits should only be denied if the statute has explicit language to that effect; indeed there is a presumption that an applicant for unemployment compensation is eligible for benefits and the burden to prove the contrary lies with the employer.

Using the guidelines described above, the Supreme Court indicated that the Plaintiff was denied benefits, and the many cases in support of his denial, was the result of chronic misinterpretation of the Voluntary Layoff Option Provision portion of 43 P.S. Section 802(b), apparently in an attempt to harmonize it with the law regarding ineligibility upon voluntary termination. Despite this, however, the Supreme Court ruled that the language quoted above, taken on its face, uses the term “layoff” without any other modifier, therefore the term layoff can refer to either temporary or permanent separations initiated by an employer. Indeed, the Supreme Court specifically indicated that the Voluntary Layoff Option Provision portion of 43 P.S. Section 802(b) specifically forbids the denial of unemployment compensation benefits due to accepting a voluntarily offered plan by an employer. The Supreme Court asserted that the language of the aforesaid statute is so unambiguous that the legislature’s intent to equate someone falling within the statute with an involuntarily unemployed claimant as opposed to someone who voluntarily terminated his own employment without a necessitous and compelling reason.

To put it simply, the Supreme Court found no language in the aforesaid statute to prevent interpreting it to allow claimants to be eligible for benefits upon accepting employer-initiated early retirement packages offered pursuant to a workforce reduction.

Originally published in The Legal Intelligencer Blog on January 27, 2014 and can be seen here.

Alcohol Putting Unemployment Compensation to the Test

In the matter of Dillon v. Unemployment Compensation Board of Review, 2013 WL 2991042, the Commonwealth Court of Pennsylvania interpreted Pennsylvania Unemployment Compensation Law to include alcohol consumption within the meaning of 43 P.S. Section 802(e.1).

The Claimant in Dillon worked for the employer as a pipe fitter for about one (1) year. During that time, the Claimant tested positive in a random blood alcohol test and was provided a last-chance agreement in lieu of termination. Not long after the aforesaid test Claimant was subjected to another random blood test, tested positive again, and was terminated from his employment as a result of the positive test. Upon his termination, Claimant attempted to secure unemployment compensation benefits and was deemed ineligible due to having committed willful misconduct. Ultimately, the Court ruled that the Claimant is ineligible for unemployment compensation benefits. Strangely, however, instead of merely affirming the Board of Review and Referee’s findings that Claimant is ineligible, the Court embarked on what seems to be an unnecessary decision regarding which provision of the Unemployment Compensation law rendered the Claimant ineligible.

Under 43 P.S. Section 802(e), an unemployment compensation claimant is ineligible for benefits if he is terminated due to willful misconduct. The Court pointed out that as long as the employer in the instant matter can prove that the Claimant was aware of, and violated, a work rule (which the Court found the employer did prove), the Claimant could be determined ineligible for benefits. This seems to affirm the Unemployment Compensation Board of Review and Referee, yet the Court proceeded to rule that, although ineligibility could have been determined through the route just described, the Claimant was actually ineligible under 43 P.S. Section 802(e.1), which specifically addresses drug use.

The Court appeared to say that now that 43 P.S. Section 802(e.1) is available to use, it would not employ 43 P.S. Section 802(e) in drug and alcohol cases, even though the matter could reach same result. According to the Court, perhaps the most important application of 43 P.S. Section 802(e.1) over 43 P.S. Section 802(e) is that 43 P.S. Section 802(e.1) allows for ineligibility due to violation of a substance abuse policy absent any showing of willful misconduct.

43 P.S. Section 802(e.1) provides that a claimant can be determined ineligible for benefits if discharged for failing to pass a “drug test.” The issue clarified by the Dillon Court was whether alcohol, which is the substance abused by the Claimant, is a “drug” as contemplated by the aforesaid statute. The opinion of the Board of Review was that the language of the statute is clear: the word “drug” is used and not “alcohol,” therefore the Claimant cannot be deemed ineligible under 43 P.S. Section 802(e.1). In the Board’s view, if the legislature wanted to use the word “alcohol” it would have done so; as the legislature elected not to use it, it is not appropriate to read it into the law.

The Court, after an analysis which included looking at the definition of “drug” in both Black’s Law Dictionary and Webster’s Third New International Dictionary, concluded that alcohol can properly be considered a “drug” as the term is typically used and, indeed, read into the law. The Court further concluded, as a result, that the legislature intended to include “alcohol” as part of the definition of the word “drug” in 43 P.S. Section 802(e.1). Finally, the Court did not believe any analysis which would exclude alcohol from the definition of the word “drug” due to drugs being illegal and alcohol legal is persuasive. The Court pointed out that just as over-the-counter drugs are legal, but able to be abused, alcohol is also legal and able to be abused. In the Court’s estimation, it is the abuse of a substance that is relevant, not its legality.

In sum, then, while a claimant can be deemed ineligible for unemployment compensation benefits for violation of a drug and/or alcohol test on the basis of willful misconduct (pursuant to 43 P.S. Section 802(e)), the Court ruled that now that the statute is available, the ineligibility must now be pursuant to 43 P.S. Section 802(e.1) which speaks directly to issue of drugs.

Originally published in Upon Further Review on August 19, 2013 and can be seen here.

Is Working on the Sidelines Out of Bounds for UC?

As the economy remains precarious, unemployment compensation benefits remain vital to keeping many Pennsylvanians afloat. Of course, many applicants for unemployment compensation benefits attempt to make ends meet by doing some sort of job on the side, such as flea marketing or landscaping on the weekends for a few dollars here and there. The issue the courts have struggled with is attempting to determine whether that flea marketer or landscaper is an independent contractor or merely engaged in a sideline activity.

Under Pennsylvania unemployment compensation law, an independent contractor is considered to be self-employed and, therefore, ineligible for unemployment compensation benefits. An independent contractor is generally someone who is free from the control or direction of an employer but, rather, works for himself or herself. As the independent contractor is not an employee, he or she is ineligible for benefits if no further work is available under his or her contracts. The issue, of course, is that someone who works at a sideline activity is also similarly free from the control or direction of an employer. Would that person be similarly ineligible for benefits? The courts have generally indicated that engaging in a sideline activity does not render one ineligible for benefits, but the precise definition of what constitutes a sideline activity is still being developed.

The primary lines of distinction between independent contracting and a sideline activity include when the activity was first undertaken and whether someone is “customarily engaged” in the activity per the language of 43 P.S. Section 753(l)(2)(B) defining “employment.” The courts have ruled that earning money or engaging in a money-making enterprise for a few hours per week or month does not necessarily equate to independent contracting. The question is, after findings of fact, whether someone could be considered “customarily engaged” in the sideline activity. In fact, it is significant to note that a potential claimant engaged in a sideline activity may even consider himself or herself an independent contractor; however, this claimant’s self-identification is irrelevant, as the analysis is exclusively based on the factual underpinnings of each case.

For example, if someone, say a truck driver, loses his job and elects to work a few hours landscaping thereafter in order to earn some money to tide him over, does that make him a contractor or engaged in a sideline activity? It all depends on whether this former truck driver is now pursuing a new business venture as a landscaper or just trying to earn a little money to scrape by before he can engage actual employment. Obviously, the analysis to determine the difference between a new business venture and sideline activity is extremely fact-intensive and focuses on the number of hours spent at the work done and the amount of investment the person makes into the work. For instance, does this former truck driver help mow his neighbor’s lawns for $20 a cut every other week, or has he established “Ryan’s Lawncare” and purchased materials and advertising toward it? It likely goes without saying that the former is a sideline activity, which would not render him ineligible for unemployment compensation benefits, while the latter would be considered establishing a business (i.e., becoming an independent contractor), rendering him ineligible for benefits.

The other relevant issue in determining whether something is independent contracting or a sideline activity is when and how the work was established. If it began while one already had an established full-time job, it is more likely to be considered a sideline activity. For example, after a few years of practice, a full-time accountant may discover he enjoys doing Web design in the evenings or on the weekends for a few hours here or there for limited compensation. Would he be considered as customarily engaged as a Web designer? The likely answer would be no, as the Web designing a few hours per week arose while he was otherwise employed as a full-time accountant as opposed to after he became unemployed from his position as an accountant. Further, the accountant’s income and time is overwhelmingly because of being an accountant and, more than likely, when asked what he does for a living, he identifies as an accountant.

Finally, it should be noted that the precise number of hours or rate of compensation is not necessarily relevant to the analysis as neither is specified by the law. Take our accountant above as an example: If his five or six hours per week of Web design expanded to 10 or 15 after he lost his job as an accountant, the Web designing would likely remain a “sideline activity” and not render him ineligible for benefits. As far as compensation is concerned, someone who works on commission and, therefore, has compensation delayed for months, perhaps weeks, could be considered employed despite having no compensation for a long period of time, as compensation is contemplated in the future for the present work.

As the cases continue to be decided on the issue, the definition of “customarily engaged” will become more refined and clear. The fact pattern of each subsequent case will further refine and crystallize what a sideline activity is and help guide potential claimants in deciding whether to undertake such an activity. Of course, before embarking on an activity that could potentially risk one’s eligibility for unemployment compensation, it is always recommended that a claimant consult with an attorney first.

Some cases on this issue that the reader may find helpful include the following: Crocker v. Unemployment Board of Review, 63 A.3d 496 (Pa.Cmwlth. 2013), Minelli v. Unemployment Compensation Board of Review, 39 A.3d 593 (Pa.Cmwlth. 2012), and Kelly v. Unemployment Compensation Board of Review, 840 A.2d 469 (Pa.Cmwlth. 2004).

Originally published in The Legal Intelligencer Blog on August 2, 2013 and can be viewed here.

Peril of Losing Benefits While Vacationing Unemployed

When one loses one’s job, being unemployed certainly can free up some time to take a trip or visit people which one otherwise would not have the time to do due to the constraints employment can put on someone. Taking such trips, however, may have the unintended, and perhaps unexpected, consequence of having one’s unemployment benefits discontinued, as happened in the recent New Jersey case of Vialet v. Board of Review, Department of Labor, and Lundbeck Research, USA, Inc. Superior Court of New Jersey, Case No.: A-1226-11T2 (2012 WL 5274565).

The Claimant in Vialet was unemployed and eligible for benefits under the applicable unemployment compensation law. Claimant collected benefits for about two (2) months, from early October 2010 to early December 2010. Coincidentally to her termination from employment, Claimant was to travel to Jamaica on December 15, 2010 to be the maid-of-honor in his sister’s destination wedding. Claimant’s trip to Jamaica was originally scheduled to be a rather short trip. As it turned out, however, Claimant’s parents were of ill-health and living in the Virgin Islands, and, since Claimant was in the Caribbean neighborhood, she flew there to pay her parents a visit after the wedding. Claimant planned to stay in the Virgin Islands until December 27 but could not return home until December 31 due to inclement weather. Claimant asserted that she would not have been able to start new employment, were she to have received an offer for the same, until January 2011, presumably due to her sixteen (16) day trip to parts of the Caribbean.

When reviewing the facts of the case, as described above, the Unemployment Compensation Board of Review ruled that Claimant rendered herself ineligible when she decided to take a trip through the Caribbean, regardless of her reason. The logic employed was this: eligibility requires a claimant to be able and available for work as well as actively seeking employment. The Board of Review believed that being thousands of miles from one’s home and being absent until January meant that she was not able and available for suitable work, because potential employers could not contact her, and she could not appear at potential job interviews. The Board of Review obviously did not believe that the Claimant was “genuinely attached to the labor market” and did not have “good cause to refuse” employment. If Claimant was asked to start at a new job on, say, December 20, 2010, she would have had to refuse, due to being in the Caribbean for what the Board of Review believed to be something other than “good cause.” The Court noted that there were some exceptions to the requirement to be able and available for work, such as a close family member’s funeral or jury duty, but international travel to a wedding was not among them.

Claimant appealed the Board of Review’s decision, arguing that modern communication and internet technology made her job search possible anywhere in the country, if not the world. Claimant also argued that the Board of Review failed to consider possible employment opportunities which could be performed through electronic means. In essence, Claimant argued that there was some sort of parity between being electronically linked to the marketplace and being physically present in it.

In order to successfully appeal the Board of Review decision, the Claimant bore a burden which is rather substantial. Specifically, the Claimant had to overcome the presumption of correctness the Board of Review enjoys. Furthermore, the Court “accords substantial deference to an agency’s interpretation of a statute that the agency is charged with enforcing” and such an interpretation can only be overcome if it can be shown to be “arbitrary, capricious, unreasonable, unsupported by substantial, credible evidence in the record, or inconsistent with either legislative policy or the agency’s enabling statute.”

After a review of the matter, the Court did not believe Claimant’s arguments overcame the burden articulated above. The Court ruled that requiring a physical presence in the marketplace was not unreasonable or arbitrary, but was consistent with existing case law. Indeed, perhaps critical to Claimant’s inability to succeed on appeal, the Court refused to account for the influence of modern technology in interpreting existing law (which predates much of this new technology). The Court upheld the Board of Review’s decision that Claimant’s trip made her unavailable and unable for employment, which detached her link from her local marketplace, was consistent with the facts presented and applicable law, and Claimant’s arguments could not overcome her burden to demonstrate otherwise. As a result, Claimant was ruled to be ineligible for receipt of benefits while she was out of the country upon leaving for the Caribbean.

The message the Court is sending is pretty clear: a claimant for unemployment compensation benefits must at virtually all times be ready to accept a job offer if one were to come his way. A claimant should be leery of taking any extended trips anywhere of a relatively long distance which could impair the ability to interview for a job or accept employment nearly immediately. Until the Court incorporates or recognizes the advancement of modern communication technology and/or telecommuting, a claimant should stay close to home while collecting benefits.

Originally published in The Legal Intelligencer on June 25, 2013 and can be viewed here.

Proving Willful Misconduct in UC Cases: Specificity Required!

In the recent matter of Lewis v. Unemployment Compensation Board of Review, 42 A.3d 375, the Commonwealth Court of Pennsylvania has reinforced the standard of proof necessary to render an unemployment compensation claimant ineligible for benefits.

 

The claimant in Lewis (hereinafter “Claimant”), allegedly got into an argument with a co-worker which became loud and each made claims of superior toughness to the other. Claimant was suspended for his behavior and later terminated. It is notable that despite the apparent loud nature of the argument described above, there were no customers present and the employer was closed for the night. Additionally, Claimant never made any threats or used profanity or offensive language, and testified to getting “loud” in retaliation to his co-worker’s raised voice.

 

The Unemployment Compensation Service Center, Referee, and Board of Review all found Claimant to have willfully violated the employer’s work rules to cause his own termination and, therefore, was found to be ineligible for benefits; the Commonwealth Court disagreed.

 

At the Referee’s Hearing, the employer brought only one witness who testified that the employer has rules and regulations and a harassment policy which Claimant allegedly violated which led to his termination. Claimant also provided testimony at the hearing to supplement the two written statements he made to his employer beforehand.

 

In reviewing the case, the Court noted that an employee’s willful misconduct is behavior which is a wanton and willful disregard for the employer’s interests, a deliberate violation of the employer’s rules and/or behavior the employer can reasonably expect, or behavior so negligent it manifests a certain culpability on the part of the employee. The burden to prove the above is on the employer, as well as the burden to prove that a claimant knew (or should have known) of the work rule at issue. If the employer can prove the above, a claimant must then prove a justifiable reason to have broken the rules in order to be eligible for benefits.

 

When comparing the evidence present at the Referee’s hearing (i.e.: the one employer witness and Claimant’s testimony and statements described above), the Court found that the employer never once identified any rule or policy actually broken by Claimant, or provided documentary evidence of the existence of the policy. Furthermore, there was no evidence, or even finding from the Board of Review, that Claimant even knew of the applicable (if any) rules of the employer.

 

Therefore, due to the complete absence of any evidence or proof that Claimant knew of a work rule, and subsequently willfully broke it, the employer simply did not meet its burden of proof, rendering Claimant eligible for benefits.

 

May this case serve as a reminder to employers: no matter how simple a case appears, or “informal” an unemployment compensation referee’s hearing seems, the burden of proving a claimant’s ineligibility lies on the employer, and it is a burden the Court takes seriously.

Originally published in Upon Further Review on February 28, 2013 which you can see here.