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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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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 IntelligencerUpon 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:

Blog Posts:

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.

Claim for Ineffective Counsel is Ineffective

The United States District Court for the Eastern District of Pennsylvania reviewed the Constitutional standard for the Sixth Amendment to the United States Constitution´s guarantee of counsel for criminal matters in the recent matter of U.S. v. Keller, 2013 WL 6409360.

Keller, an attorney, was a defendant in a criminal case where he was convicted of wire fraud consequent to misappropriating his clients´ money which he held in escrow for them. After his conviction, Keller moved to vacate his conviction on the basis of having ineffective defense counsel pursuant to the Sixth Amendment, which is the subject of the above-cited case. In order to warrant a reversal of a criminal conviction on the basis of ineffective counsel, Keller had to demonstrate that his attorney´s performance was deficient and that his attorney´s deficient performance prejudiced his defense.

In order to demonstrate that his attorney´s performance was deficient Keller had to show that his attorney´s conduct was not just deficient, but below an objective standard of reasonableness. An objective standard of reasonableness means that the lack of success of a particular tactical decision is not necessarily evidence of deficient performance. The court will not engage in hindsight to evaluate an attorney´s decisions. To demonstrate prejudice, one must apply a “but for” analysis where one must show that the negative result of a trial (e.g., the conviction) would not have occurred but for the deficient representation.

Keller listed a multitude of issues which he believed demonstrated deficient representation to warrant setting aside his conviction; the Court disagreed with each one and each will be briefly described below.

First, Keller claimed that an agreement between the prosecutor and his attorney regarding certain evidentiary issues demonstrated a conflict of interest as Keller claimed his attorney wanted to “go easy” on the trial judge in order to curry favor with the trial judge in a concurrent civil case his attorney coincidentally also had with the trial judge. The Court rejected this argument, pointing to a lack of evidence and the fact that the evidentiary issues were not really in dispute.

Second, Keller took issue with the fact that his attorney did not oppose the prosecutions´ admission of recorded conversations as evidence. The Court rejected this argument on the basis that no viable argument for their inadmissibility could be articulated, nor did Keller attempt to make one in his motion. The Court made it clear that failing to raise non-meritorious arguments does not amount to deficient legal representation. Keller subsequently argued that these recordings were obtained through duress and/or were unfairly prejudicial or coercive. He also claimed that the transcripts for the recordings were flawed. These arguments were rebuffed by the Court, which indicated that pressure to reach agreements is not necessarily duress and there was no prejudice as an undercover investigation is, under applicable law, explicitly not prejudicial or coercive. Regarding the transcripts, the trial judge specifically instructed the jury to give weight to the recordings over the transcripts for the same if discrepancies were found between the two; regardless, Keller never identified which portions of the transcript were inaccurate. Indeed, Keller offered testimony to explain the above during the trial so the jury which convicted him was completely aware of the issues at play. Therefore, Keller´s attorney electing not to object to the above was not deficient.

Third, Keller was critical of his attorney´s handling of witnesses. The Court noted that Keller did not demonstrate that his attorney´s decisions regarding witnesses had any effect on the outcome on his trial. Further, the additional witnesses Keller wanted to be called (who his attorney did not call) did not amount to deficient counsel as the Court believed their testimony would only have amounted to cumulative evidence anyway. Besides, the Court noted, the witnesses his attorney elected not to call had their own set of credibility issues (e.g., one uncalled witness was Keller´s fiancée) to make the decision not to call them tactically justified. The trial judge also gave Keller´s attorney significant deference in how aggressively he examined the witnesses especially considering the tactical options open to him.

Fourth, Keller then complained that his attorney did not make an issue of the fact that one of the jurors audibly complained of the length of deliberations and that another juror held the hand of the victim during sentencing. According to the Court, even if both of the above were true, neither action evidenced enough prejudice to warrant setting aside the conviction. Moreover, Keller does not make any allegation that the above actually resulted in prejudice, confirming the trial judge´s ruling on the matter.

Fifth, Keller lists a variety of times he believed his attorney should have objected to testimony on the basis of hearsay. However, the Court rejected this argument as well as Keller failed to demonstrate that the testimony at issue was actually inadmissible. Indeed, the Court found that the testimony highlighted by Keller was either admissible or was strategically allowed to be entered in as evidence to help his case; regardless, Keller did not demonstrate that the admission of the testimony at issue led or contributed to his conviction.

Sixth, Keller took issue with his attorney not raising the issue of alleged false grand jury testimony. However, the Court was not persuaded by this argument noting the extremely high standard (which is unlikely to be met) to successfully make an issue of testimony before a grand jury and that, even if Keller is correct, it would have had no effect on his indictment.

Finally, Keller raised complaints about his attorney´s performance during sentencing. Keller´s initial argument regarding his attorney´s alleged failure to object to the amount calculated as damages was simply factually wrong as, according to the Court, he did object. His subsequent argument claiming the lack of character witnesses called by his attorney was rejected by the Court as Keller´s own testimony conflicted with the testimony he claimed he wanted elicited from his potential witnesses. He concluded by criticizing his attorney´s failure to raise an argument regarding the alleged insufficiency of evidence at the trial to prove his criminal intent, but the Court was not persuaded by this argument either as the Court ruled that any arguments to that effect were not meritorious anyway.

As can be seen above, the standard to successfully prove one had ineffective counsel sufficient to meet Sixth Amendment scrutiny is extremely high, which should be of some comfort to practitioners. Ultimately, regardless of the multitude of arguments presented by Keller, none could meet the basic two prong test his arguments had to pass, namely that: (1) an attorney´s representation must be objectively below standards and (2) the poor representation must result in a negative outcome.

Originally published in Upon Further Review on June 16, 2014 and can be seen 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.

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