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© 2012 Barley Snyder

Pennsylvania Legal Update and Unemployment

Compensation Primer

Presented By: David J. Freedman, EsquireBarley Snyder LLC126 East King StreetLancaster, PA 17602Tel: 717-399-1578Fax: 717-291-4660Email: dfreedman@barley.com

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Pennsylvania Legal Update

• Slow year.

• Areas with some movement:– Wage & Hour– Immigration– Unemployment Compensation

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Wage & Hour

• FLSA features “8/80” rule for health care employers.– 80 hour work week for determining overtime– But anything over 8 hours in a single day must

be paid at 1.5 the regular rate.

• Turner v. Mercy Health Sys., 2010 Phila. Ct. Com. Pl. LEXIS 146 (Pa. C.P. 2010)– 8/80 doesn’t apply under PMWA.

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Wage & Hour

• House Bill 1820, signed into law on July 5, 2012

– Amends the PMWA to permit healthcare institutions to use 8/80.• If use complies with the FLSA

– Effective immediately.

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Immigration

• Chamber of Commerce v. Whiting, 131 S. Ct. 1968 (2011)– Legal Arizona Workers Act:• Required employers to use E-Verify for new

employees• Prohibited employer from knowingly hiring

unauthorized aliens• Imposed suspension or permanent revocation of

all state licenses as sanctions.– Sanction puts an employer out of business in Arizona.

• Supreme Court upheld the law as valid exercise of state licensing power.

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Immigration• Public Works Employment Verification Act of

2012– Requires public works contractors and

subcontractors to use E-Verify.– Contractor must verify that it checked the status

of all new hires and that new hires are legal.– Applies to government contracts for construction,

reconstruction, demolition, alteration, or repair work (other than maintenance, when the total project cost exceeds $25,000.• Contracts paid for in any part by the Commonwealth or

any political subdivision, including county, city, borough, town, township, or school board.

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Immigration

• Public Works Employment Verification Act of 2012– Penalties range from warning (1st offense) to

three-year ban on public contracting.

– $1,000 fine for failure to submit verification

– Goes into effect on January 1, 2013.

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Unemployment Compensation

• Senate Bill 1310: Signed into law by Governor Corbett on June 12, 2012

• Second major overhaul of unemployment compensation financing procedures and benefits allocation in less than a year.

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Unemployment Compensation

• Senate Bill 1310:– Employers’ UC tax rate adjusted by increasing

the taxable wage base from $8,000 to $10,000, but decreasing state adjustment factor incrementally from 1.5% to .75% by 2018.

– Freezes maximum weekly benefit at $573 through 2019.• Between 2019 to 2023, maximum may increase by

no more than 8%.

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Unemployment Compensation

• Senate Bill 1310:– Claimants’ benefits will be offset by part-time

earnings if earnings exceed 30% of benefit.

– Claimants must earn at least 49.5% of their base year earnings outside of highest grossing quarter in order to be eligible for benefits.• Previously, this number was 37%.

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Unemployment Compensation

• Commonwealth’s extended unemployment compensation benefits (“EB”)– Up to 13 weeks of additional benefits after

exhaustion of regular UC and federally-funded extended UC.

– Applies only during periods of unusually high unemployment

– EB ended effective May 12, 2012.

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BRIEF PRIMER AND REVIEW

Common misconception: Employees terminated for poor performance or attendance cannot receive unemployment compensation benefits.

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erDEFINITION OF WILLFUL

MISCONDUCT• Willful misconduct: – (1) an act of wanton or willful disregard of the

employer’s interests; – (2) a deliberate violation of the employer’s rules; – (3) a disregard of the standards of behavior which

the employer has a right to expect of an employee; or

– (4) negligence indicating an intentional disregard of the employer’s interests or of the employee’s duties and obligations to the employer.

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ATTENDANCE/TARDINESS

• Absenteeism or tardiness alone does not constitute willful misconduct. – Employee must prove “good cause.”

• Illness• Sick Child• Family Emergency• Child Care Problems

– Employee must prove that he/she reported absences properly.• In compliance with Employer’s policy.

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TERMINATION FOR ABSENCES WHICH IMPLICATE FMLA

• Eshbach v. UCBR: Commonwealth Court held that where the employer discharges a claimant for absences which claimant reasonably believed were protected under the FMLA, employer cannot prove willful misconduct. – Claimant failed to report her absence for three consecutive

days. – Claimant testified that she did not think she needed to

report the absences because they were under approved FMLA leave.

– The leave involved taking care of her sick daughter who was due to give birth.

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erUNSATISFACTORY WORK

PERFORMANCE• Not willful misconduct if employee is

working to the best of his/her ability. • Employer must prove either:– (1) Deliberate refusal to perform; or– (2) Some additional factor demonstrating

willful disregard:• Simplicity of task• Past satisfactory performance

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SUBSTANCE ABUSE ISSUES AND UNEMPLOYMENT COMPENSATION

• Benefits may be denied when claimant is terminated for failing to submit to and/or pass a drug or alcohol test.– Requires established substance abuse policy.

• May not violate a labor agreement.

• Policy should prohibit reporting to work with the presence of alcohol in one’s bodily systems, rather than being “under the influence”. – If policy is being “under the influence,” employer must prove actual

impairment of abilities due to substance abuse. • Employer must present testimony from the medical

review officer or custodian of drug test results – Report was made in the regular course of business;– Report was made at or near the time of event; and– Chain of custody.

• Always ask employee, and document what he/she told you.

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WHAT IF I DON’T APPEAL OR SHOW UP AT THE REFEREE’S HEARING?

• A UC finding is not binding in any legal action in another forum. – Failure to contest benefits does not prejudice the

employer in another forum. – BUT Testimony taken under oath at a referee’s hearing

may be admissible.• Beware of overly aggressive hearing defenses.

• Lawyer representation is not required at a

referee’s hearing, but may be advisable in certain cases. – Contributory vs. Reimburseable Employer

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RESIGNATIONS• A forced resignation is treated as a termination.

• Employer must demonstrate willful misconduct.• Termination must be imminent, mere possibility is not

sufficient. • If employee revokes his/her voluntary resignation

before the effective date, and the employer has not taken substantial steps to replace the employee, the employee is eligible for benefits.

• If the employee postpones the resignation and the employer accelerates the resignation to the original date, the employee can receive benefits between the original and the accelerated date ,if the employer has not taken substantial steps to replace the employee.

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UNEMPLOYMENT COMPENSATION ELIGIBLITY DURING PREGNANCY AND OTHER MEDICAL LEAVES

• Implicates “Able and Available” requirement.

• Pregnancy does not create a presumption of unavailability.

• Employee must show that she/he is available to do some work and a reasonable opportunity for such work exists.

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SEVERANCE PAY AND UNEMPLOYMENT COMPENSATION OFFSETS

• In June 2011, Senate Bill 1030 made significant changes to the way unemployment benefits are administered and calculated.

• Now, severance over $17,853 (40% of the “average annual wage” under the UC Law, so the exact number will change periodically) is offset from benefits on a weekly basis.• Does not affect vacation or retirement pay.

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SEVERANCE PAY AND UNEMPLOYMENT COMPENSATION

OFFSETS• Practice Tip:– The cost of severance agreements may go up as

plaintiffs’ lawyers filter into any settlement the offset. The Commonwealth’s gain may be at the employer’s expense.

– Do not state or suggest that severance will not affect unemployment. It may.

– Consider including in your standard severance agreement a statement that the denial or reduction in unemployment will have no effect on the general release.

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PARTIAL BENEFITS• Employees can receive partial benefits if (1) their regular

hours are reduced because of lack of work, (2) if they are terminated and get a job with fewer hours, and (3) the employee is separated from his/her job but has part-time employment with another employer.

• An employee can earn up to 30% of the weekly benefit rate without a reduction in benefits. This is known as the partial benefit credit. For example, if the benefit rate is $200, the partial benefit credit is $60 ($200 x .3). If the employee earns $100 during a benefit claim week, the weekly benefit would be reduced to $160 ($200 + partial benefit credit of $60 = $260 - $100 = $160).

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Relief from Charges

• Base-year employers whose former employees are receiving benefits must file a “Relief from Charges” form to avoid being charged.

• Employers are eligible for relief only in cases where employee would be ineligible (willful misconduct, voluntary quit, etc.).

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Relief from Charges

• Relief from Charges forms should be filed immediately, even if you believe the Claimant will be ineligible.– Employee has ability to “purge” eligibility

determination with future employer, and you would be charged if the employee later becomes eligible and you did not file for relief.

– Relief from charges will only apply to periods after the forms are filed.

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Relief from Charges

• Senate Bill 1030 Reform:

• Automatic Relief from Charges where a claimant is ultimately deemed ineligible for benefits

• Automatic Relief from Charges for part-time employers where the employee has been laid off from a contemporaneous employer

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erFurther Reforms of

Senate Bill 1030• Claimants must prove they are actively

searching for work by registering for the PA CareerLink system, posting a resume, and applying for similar positions within a 45-minute commuting distance.

• Beginning in 2015, claimants eligible for one week of unemployment for every week they have worked, up to 26.

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erRECENT DECISIONS OF NOTE—Off

Duty Misconduct• Maskerines, Petitioner v. Unemployment Compensation

Board of Review (Commonwealth Court-January 3, 2011): Employee admitted to possession of marijuana off-duty. Employer had strict “no drugs” work rule of which the employee was aware, and the employee was under a “last-chance agreement” with respect to the no drugs policy. The Court affirmed the denial of eligibility on grounds of “willful misconduct” and held that the employer did not need to show that the drugs affected the workplace.

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RECENT DECISIONS OF NOTE-PLEADING NO CONTEST TO CRIMINAL CHARGES

• Green v. Unemployment Compensation Board of Review (Commonwealth Court: July 13, 2011): Employee pled nolo contendere (no contest) to endangering the welfare of a child in connection with alleged sexual activity. • Plea establishes that he engaged in criminal conduct.• But Board reversed because employer failed to prove

how conduct related to his job. • Employee deemed eligible.

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RECENT DECISIONS OF NOTE-INDEPENDENT CONTRACTORS

• Osborne Assocs. v. Unemployment Compensation Board of Review (Commonwealth Court-January 10, 2012): Who is an “employee” under the Unemployment Compensation Law.• Licensed cosmetologist who substituted at a salon on eight

occasions over the course of a year was determined by the Board to be an “employee.”

• Anyone paid wages is presumed to be an employee.• But employer can overcome presumption by proving

• (1) The claimant was free from control or direction; and • (2) the service was customarily performed by an independent contractor.

• The parties conceded that the second prong.• With respect to “control or direction,” the court held that, since

the claimant provided some of her own tools, worked on only eight occasions with no fixed schedule, and worked for other salons, she was an independent contractor.

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THE END.(Questions?)