Friday, September 05, 2008

UC- voluntary retirement - pre-retirement termination

Port Authority v. UCBR - Commonwealth Court - September 4, 2008

Claimants' employment was terminated; they did not quit their jobs - Following the decisions in Amado v. UCBR, 110 A.2d 807 (Pa. Super. 1955) and PECO Energy Co. v. UCBR, 682 A.2d 40 (Pa. Cmwlth. 1996, and distinguishing that in Davila v. UCBR, 926 A.2d 1287 (Pa. Cmwlth. 2007), the court held that where the employer discharged claimants before their designated retirement dates in a deferred retirement option plan (DROP), the claimants "are considered to have been discharged until such time as those periods expire, and after which time they are considered to have voluntarily quit."

Under the DROP program, the claimants submitted their resignations but continued to work, by agreement with the employer, which had the right to discharge the claimants at any time. However, "such resignations and participation were not sufficient to waive their right to unemployment compensation.....[U]nder Section 701 of the Law, 43 P.S. § 861, employees cannot agree to waive their unemployment compensation benefits. Were we to accept employer’s argument, well-counseled employers would simply ask each new hire to resign effective his first day of work and select a period during which he requested to continue work. Employer could then keep the employee at its leisure, until it unilaterally decided it no longer wished to employ him, at which point it would “retire” him, and such “retirement” would be considered a voluntary quit. Such a scheme subverts the intention of the Law."

"Although Claimants tendered resignations, which purported to be effective as of February 2003, employer invited them to request a period during which they would continue to work, and employer then continued to employ Claimants during this selected period, after the purported effective date of Claimants’ resignations. Under these facts, it is clear that Claimants’ resignations were to be effective at the end of their DROP periods. Therefore, pursuant to Amado and PECO, the Board did not err in determining that, during the time prior to the expiration of their DROP periods, Claimants’ unemployment should be considered involuntary, and analyzed under Section 402(e)"

Claimants are not at fault for the unemployment under Sec. 3 - The court also rejected the employer argument that claimants should be disqualified under Sec. 3 of the UC Law. Claimants were clearly willing and available to continue working had employer not required them to stop. We do not view such participation [in the DROP program] as the sort of culpability upon which this Court has relied in the cases employer cited dealing with Section 3. Employment in Pennsylvania is usually considered to be at-will. Even assuming that claimants had a right to continued employment, which they somehow relinquished by entering into the DROP program, such relinquishment would not be fault of their own sufficient to deny benefits when employer subsequently discharged them.

UC is not a means-tested program - The court rejected the employer's argument that benefits should not be awarded because claimants are not "subject to econonic hardship. Even though the UC law is meant to relieve the "economic hardship of sudden unemployment and provide temporary assistance for the resulting economic burden,” there is "no authority for the proposition that unemployment compensation benefits are, or should be, means-tested, or that only claimants who will be impoverished may receive benefits."