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Archive for the tag “retire”

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.

The Effect of Retiring on Workers’ Compensation Benefits

The matter of Krushauskas v. Workers’ Compensation Appeal Board, 56 A.3d 64 (Pa.Cmwlth. 2012), involved a claimant who suffered a work-related injury while working as a stock picker for General Motors. Claimant Thomas Krushauskas filed a penalty petition against GM alleging it unilaterally suspended his benefits without any additional agreement or order. Simultaneously, Krushauskas voluntarily entered GM’s attrition plan and accepted early retirement. The court noted that no one was forced into the attrition plan and, in fact, Krushauskas had 45 days to revoke the decision to enter it. Krushauskas argued that he did not intend to retire and was simply taking advantage of the plan offered.

The court ruled that GM violated the Workers’ Compensation Act when it unilaterally – without agreement or court order as a result of Krushauskas’s retirement – suspended Krushauskas’ benefits because of him retiring per his entrance into the attrition plan. Generally, an employer is supposed to file a petition specifically requesting the relief sought. Despite this, the court noted that it has never required unreasonable strictness in workers’ compensation pleadings. Unfortunately for Krushauskas, because the court also ruled that he did, indeed, retire, the unilateral suspension did not cause any loss in workers’ compensation benefits owed to him.

The court’s ruling that Krushauskas did retire, contrary to his argument that he did not actually intend to do so, was based on a credibility determination of Krushauskas’ testimony. As stated above, Krushauskas’ representations in the documentation for the attrition plan indicated retirement and the court found those representations likely to be true.

Perhaps the most significant aspect of the court’s ruling is that it clarified and consolidated previous rulings that a workers’ compensation judge has the authority to suspend/terminate a claimant’s benefits without a formal petition from the employer as long as doing so would not be prejudicial to the claimant. A claimant having an opportunity to defend him or herself, and/or having adequate notice, would tend toward the matter lacking prejudice against the claimant even if the workers’ compensation procedures were not followed with precision.

The court noted, based on the facts presented, that Krushauskas certainly had sufficient notice and knew a suspension of benefits was possible. Indeed, the court drew significance from the fact that when GM argued that Krushauskas voluntarily retired, he objected on the basis of relevance, and not surprise, which would have been the objection if he did not have sufficient notice. Furthermore, Krushauskas never attempted to submit additional evidence to oppose the argument that he voluntarily retired.

The court further indicated that where someone accepts a retirement pension, as Krushauskas did here, then the employer is entitled to a suspension of benefits. Benefits will be suspended unless the claimant can show that he is seeking employment or he was forced into retirement because of a work-related injury. In the instant case, Krushauskas clearly accepted a retirement pension and never testified to seeking new or continued employment.

When collecting workers’ compensation, be sure to consider all implications before accepting a retirement plan or pension, as the workers’ compensation benefits may be terminated long before expected.

Originally published on February 1, 2013 in The Legal Intelligencer Blog and can be found here.

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