Sunday, December 14, 2014

UC - voluntary quit, sec. 402(b) - vol. layoff - claimant not ineligible under Diehl rationale

Naval Surface Warfare Center v. UCBR – Cmwlth. Court – December 12, 2014

Sec. 402(b) does not  render a claimant ineligible where he leave under a “Voluntary Layoff Option” (VLO), because his separation from employment was due to his acceptance of a layoff pursuant to an established employer plan which is part of a labor force reduction.

Following the decision in Diehl v. UCBR, 57 A.3d 1209 (Pa. 2012), the court also held the claimant does not have the burden to show a necessitous and compelling reason for leaving a job where the VLO language of sec. 402(b) applies, i.e. where the retirement offer made to Claimant was offered as a part of an established plan by Employer that had the practical effect of a workforce reduction.

Section 402(b) of the Law provides that an employee shall be ineligible for unemployment compensation in any week in which unemployment is due to voluntarily leaving work without cause of a necessitous and compelling reason. 43 P.S. § 802(b). However, the VLO Provision within Section 402(b) cautions:

Provided further, That 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.

In Diehl, the Supreme Court examined the language of the VLO Provision and the intent of the General Assembly, as expressed in Section 3 of the Law.6 The Court highlighted the broad humanitarian objective of the Law expressed in Section 3, and recognized that a cardinal principle of the Law is that the eligibility sections must be construed liberally and the disqualification sections construed narrowly so that an unemployed worker shall be denied benefits only where the plain language of the Law unequivocally excludes the worker from receiving unemployment compensation. Diehl, 57 A.3d at 1217-1218; see also Penn Hills School District v. Unemployment Compensation Board of Review, 437 A.2d 1213, 1216 (Pa. 1981).

 The Diehl Court stressed that Section 402(b) establishes an exclusionary rule for claimants who have left employment without a necessitous and compelling reason, but that the VLO Provision is an eligibility carve-out from this disqualification provision that must be construed broadly in favor of the claimant seeking unemployment compensation. Diehl, 57 A.3d at 1221.  Looking at the VLO language as a whole, the Court stated that “the VLO Proviso applies to employees accepting employer offered early retirement packages as part of a labor force reduction, because such programs are merely a different way to accomplish the workforce reduction of a layoff.” Id. at 1222.

 The Commonwealth Court rejected the employer's argument that unemployment compensation benefits are only available when employment is terminated due to a RIF (reduction in force), as opposed to a VERA (voluntary early retirement authority). This interpretation of the Law conflicts with the plain language of the VLO Provision and was unequivocally rejected in Diehl, where the Supreme Court overruled Commonwealth Court precedent and made clear that the VLO Provision applies when a layoff is voluntary. Id. at 1221.

 Following Diehl, the issue of whether the separation was forced and whether a claimant’s decision was motivated by an objective fear that if the voluntary offer was not taken the separation from employment could later lead to a termination of employment, are not determinative of whether a claimant is eligible for UC benefits under the VLO Provision. Instead, the focus is on whether the facts demonstrate that the separation was due to a claimant’s acceptance of a “layoff.”

 In the instant matter, the evidence demonstrated that the offer of early retirement was initiated at the will of Employer and accepted by Claimant, that Claimant accepted the offer from an available position, and that the early retirement offer was made pursuant to a plan established by Employer. (R. Item 17, Board H.T. at 7, 8-9.) This evidence, along with the evidence that Claimant was “otherwise eligible,” created a presumption that Claimant was eligible for unemployment compensation under the VLO Provision. Diehl, 57 A.3d at 1222. The burden then shifted to Employer to demonstrate that the early retirement offer was not a “layoff.” Employer failed to carry this burden.

 The evidence in the record "clearly supports the Board’s determination that the practical effect of Employer’s plan was a layoff of Claimant.  Employer’s witness testified that under the VERA plan, employees in various positions “were identified as the starting point for a restructuring effort within [Employer’s] organization,” as “surplus or positions that were no longer needed in the workforce.”