D. Jennings v. UCBR ( 2018 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Denise Jennings, :
Petitioner :
:
v. : No. 216 C.D. 2018
: Submitted: August 10, 2018
Unemployment Compensation :
Board of Review, :
Respondent :
BEFORE: HONORABLE ROBERT SIMPSON, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE DAN PELLEGRINI, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE SIMPSON FILED: September 7, 2018
Denise Jennings (Claimant), representing herself, petitions for review
from an order of the Unemployment Compensation Board of Review (Board). The
Board affirmed a referee’s determination that Claimant was ineligible for
unemployment compensation (UC) benefits under Section 401(a) of the
Unemployment Compensation Law1 (Law) (financial eligibility criteria). Claimant
argues the denial of UC benefits unfairly penalizes her for receiving a lump sum
severance payment on the termination of her employment. Upon review, we affirm.
I. Background
Claimant worked for Mondelez Global LLC (Employer). In April
2016, Employer terminated Claimant’s employment because of a plant closure.
Claimant received a lump sum severance payment of $118,769 from Employer.
1
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S.
§801(a).
Claimant promptly filed an application for UC benefits (2016
Application). In May 2016, the Department of Labor and Industry (Department)
issued a determination of eligibility establishing a benefit year from May 1, 2016
through April 29, 2017. However, the Department further determined in May 2016
that Claimant’s UC benefits were subject to deductions based on her severance pay.
The Department attributed and deducted Claimant’s severance payment from her
UC benefits in the 38 weeks from May 2016 to January 2017. Those deductions
reduced her UC benefit payments to $0 until January 2017. Claimant did not appeal
the 2016 determination, and it is not at issue in this appeal.
After the deductions from her UC benefits based on her severance pay
were exhausted in January 2017, Claimant began receiving payments of her
remaining UC benefits. Those benefits ended with her benefit year in April 2017.
Although 52 weeks passed after Claimant became eligible for UC benefits, she
received payments of UC benefits for only 14 of those weeks, based on the
attribution and deduction of severance pay from the UC benefits otherwise payable
to her.
After her benefits ended in April 2017, Claimant filed a new application
for UC benefits (2017 Application). Under Section 4(a) of the Law, 43 P.S. §753(a),
the filing of the 2017 Application in the second quarter of 2017 established a base
year consisting of the first through fourth quarters of 2016 for determining financial
eligibility.
2
In 2016, Claimant’s wages were $42,118.72 in the first quarter. Her
severance pay brought her total second quarter wages to $218,128.39. She had no
wages in the third and fourth quarters. Accordingly, her total income in 2016 was
$260,247.11.
Section 401(a) of the Law, 43 P.S. §801(a), requires that to be eligible
for benefits, a claimant must have received not less than 37% of her total base year
wages in one or more quarters other than the highest quarter of the base year.
Claimant’s combined income of $42,118.72 for the first, third, and fourth quarters
of her base year, 2016, was less than 37% of her total base year income of
$260,247.11. Consequently, the Department issued a determination of financial
ineligibility under Section 401(a) of the Law.
Claimant appealed the Department’s determination on the 2017
Application. After holding a hearing, a referee affirmed. Claimant then appealed to
the Board, which affirmed the referee’s decision. Claimant filed a timely petition
for review in this Court.
II. Issues
On appeal,2 Claimant argues the Department improperly counted her
severance pay against her twice. Initially, the amount of the severance payment was
divided into weekly segments and allocated to the weeks and months following
2
Our review of a Board decision of financial ineligibility is limited to a determination of
whether necessary findings of fact were supported by substantial evidence, whether the Board’s
adjudication was in accordance with the law, and whether constitutional rights were violated.
Devine v. Unemployment Comp. Bd. of Review, 101 A.3d 1235 (Pa. Cmwlth. 2014); see 2 Pa.
C.S. §704.
3
Claimant’s separation from employment. The allocated amounts were deducted
from the UC benefits she would otherwise have received pursuant to the 2016
Application from May 2016 until January 2017. However, when Claimant applied
for UC benefits again in April 2017, the severance payment was not divided and
attributed to the weeks and months following separation, for purposes of calculating
Claimant’s quarterly wages under the 2017 Application during her base year of
2016. Claimant contends this was unfair because although paid in a lump sum, the
severance pay was intended to be applicable to one year. Pet’r’s Br. at 8, 10.
Claimant also characterizes the deduction of her severance pay from
her UC benefits as delaying her eligibility for benefits. Consequently, she contends
her period of eligibility should have been extended to compensate for that delay.
She argues she was entitled to 26 weeks of UC benefits in connection with the 2016
Application, but only received 14 weeks of benefits. She reasons she is entitled to
an additional 12 weeks of UC benefits.
In addition, Claimant asserts UC personnel gave her incorrect
information on applying for UC benefits. She alleges UC representatives came to
her workplace to provide UC benefits information. They advised employees to file
applications for UC benefits immediately upon separation from employment.
Claimant also avers she called the Department on multiple occasions in 2017 and
received conflicting and incorrect information about seeking her remaining 12 weeks
of UC benefits. Claimant contends this advice contributed to the Department’s
determination of ineligibility under the 2017 Application.
4
The Board counters that there was substantial evidence to support its
factual findings. Further, the Board points out that the provisions on financial
eligibility and attribution of severance pay are separate parts of the Law, and the
Board must give effect to both without regard to whether they interact fairly.
III. Discussion
It is the claimant’s burden to demonstrate financial eligibility for UC
benefits. Devine v. Unemployment Comp. Bd. of Review, 101 A.3d 1235 (Pa.
Cmwlth. 2014). Section 4(a) of the Law, 43 P.S. §753(a), provides that UC benefits
are calculated by reference to the claimant’s income in her base year. The base year
includes “the first four of the last five completed calendar quarters immediately
preceding the first day of an individual’s benefit year.” Id. As explained above, to
be financially eligible under Section 401(a) of the Law, 43 P.S. §801(a), a claimant
must receive not less than 37% of her total base year wages in one or more quarters
other than the highest quarter of her base year. See Devine.
A. Claimant’s Severance Pay
The receipt of severance pay from an employer does not render a
claimant ineligible for UC benefits. Rebo v. Unemployment Comp. Bd. of Review,
499 A.2d 732 (Pa. Cmwlth. 1985). However, the amount of severance pay may
affect the amount of UC benefits received by an eligible claimant. Section
404(d)(1.1) of the Law provides a mandatory calculation formula for attributing
severance pay and calculating its deduction from UC benefit payments. See 43 P.S.
§804(d)(1.1).
5
Here, the Department explained the Law and its application to
Claimant’s severance pay in its Notice of Determination dated May 18, 2016:
Section 404(d)(1) of the [Law, 43 P.S. §804(d)(1)] provides, in
part, that benefits shall be paid to each eligible employee who
is unemployed with respect to such week, compensation in an
amount equal to his weekly benefit rate less the total of (iii) the
amount of severance pay that is attributed to the week. Section
404(d)(1.1)(i) [43 P.S. §804(d)(1.1)(i)] defines severance pay
as one or more payments made to an employee on account of
separation from the service of the employer, regardless of
whether the employer is legally bound to make such payments.
The deductible amount of severance pay attributed to the weeks
immediately following the employee’s separation is calculated
by subtracting 40% of the average annual wage (i.e.
$19,840.91) from the total amount of severance pay paid or
payable to [Claimant], by [E]mployer (i.e. $118769.00). In this
case, the total deductible amount of severance pay is
$98928.00. The number of attributable weeks immediately
following [Claimant’s] separation is determined by dividing
the deductible severance pay by the regular full-time weekly
wage of [Claimant]. In this case $2785 is attributable [to]
week(s) ending 05/07/16 through 12/31/16, and $1418 to claim
week ending 01/07/17.
Certified Record (C.R.), Item #11 at 8. Based on this calculation, the Department
revised Claimant’s weekly benefit rate to $0 for the weeks ending May 7, 2016
through January 7, 2017. Id. As noted above, Claimant did not appeal that
determination.
When Claimant sought further UC benefits in the 2017 Application, the
date of filing of the new application established a new base year consisting of the
four quarters of 2016. Severance pay is considered wages for purposes of UC
6
eligibility. Cugini v. Unemployment Comp. Bd. of Review, 512 A.2d 1169 (Pa.
1986). Wages are generally deemed paid on the date the employer actually pays
them. 34 Pa. Code §61.3(a)(1). Therefore, Claimant’s severance pay, which she
received in May 2016, was part of her second quarter 2016 wages for purposes of
her UC financial eligibility pursuant to the 2017 Application. As explained above,
this resulted in a determination of financial ineligibility because Claimant’s
combined income for the first, third, and fourth quarters of 2016 was less than 37%
of her total base year income.3
Claimant argues this outcome was unfair because her severance pay
was allocated week by week to reduce her UC benefits received pursuant to the 2016
Application, but considered as a lump sum payment for purposes of determining her
eligibility under the 2017 Application. However, the Law need not be perfect in its
every application in order to be valid. “[I]nequities in the distribution of benefits are
an unfortunate concomitant of complex economic-social welfare legislation which
must ultimately reflect a balance between legislative efforts to eliminate an evil, e.g.,
the debilitating effects of unemployment, administrative realities and the problem of
allocating scarce financial resources in a complex society.” Martin v.
Unemployment Comp. Bd. of Review, 466 A.2d 107, 119 (Pa. 1983); Devine, 101
A.3d at 1238-39 (quoting Martin, 466 A.2d at 119).
3
The percentage of this earnings requirement has varied over time. Before the most recent
amendment in 2016, a claimant had to earn at least 49.5% of her qualifying wages in the quarters
outside the highest quarter of her base year. See Act of November 3, 2016, P.L. 2016-144, as
amended, 43 P.S. §801(a)(2); Act of June 12, 2012, P.L. 2012-60, as amended, 43 P.S. §801(a)(2);
Devine v. Unemployment Comp. Bd. of Review, 101 A.3d 1235 (Pa. Cmwlth. 2014).
7
In Martin, our Supreme Court rejected a constitutional challenge to the
financial eligibility requirements as they then existed. Noting that the legislature
needed only a rational basis for its eligibility requirements, the Court concluded the
statutory scheme “was designed to and does serve a legitimate state end even though
it does result in some inequality.” Id. at 111. The Court additionally observed that
many states impose similar requirements for UC financial eligibility:
Various methods have been adopted in the numerous
jurisdictions which require claimants to earn a percentage of
qualifying wages outside their highest quarter as an alternative
measure for actual time worked because of the difficulty in
obtaining accurate statistics for the latter. All such methods are
only rough measures of time actually worked, since the amount
of a claimant’s earnings in any period is a function of both time
and rate of compensation. They have, nevertheless, survived
constitutional challenge. Ertman v. Fusari, 442 F. Supp. 1147
(D.C.Conn.1977). Thus, the rational relationship between the
requirement that a claimant earn a percentage of income
outside the highest quarter to a legitimate government interest
is not disputed.
Id. at 114-15.
Here, Claimant’s fairness argument is essentially an equal protection
challenge. The Court’s analysis in Martin makes clear that such an argument cannot
prevail.
Claimant further contends Employer meant the severance payment to
be for one year and it should be deemed to have been received in increments
throughout that year. This argument lacks merit. As noted above, the general rule
is that wage payments are deemed received when paid. 34 Pa. Code §61.3(a)(1).
8
An exception to this rule may arise where a payment is not made in accordance with
the employer’s normal practice. Cugini. However, a claimant asserting such an
exception bears the burden of proof on that issue. Id. Here, Claimant has not
alleged, much less proven, that Employer’s payment of severance in a lump sum
differed from its normal practice. Nothing in the certified record suggests Employer
normally made severance payments over the course of a year rather than in a lump
sum. Therefore, Claimant did not show any exception to the general rule of 34 Pa.
Code §61.3(a)(1). See Alla v. Unemployment Comp. Bd. of Review, 119 A.3d 434
(Pa. Cmwlth. 2015).
Claimant’s argument also reflects a fundamental misreading of the Law
and the Department’s May 18, 2016 determination. She evidently believes she did
not start receiving UC benefit payments until January 2017 because her severance
pay delayed the starting point of her UC eligibility, and thus, the running of her
benefit year. That was not the case.
Severance pay allocations and resulting deductions from UC benefit
payments come into play only after a claimant is found eligible for UC benefits. 43
P.S. §804(d)(1) (“each eligible employee” shall receive UC benefit payments in the
amount of her weekly benefit rate, less “the amount of severance pay that is
attributed to the week”) (emphasis added); Rebo v. Unemployment Comp. Bd. of
Review, 499 A.2d 732, 735 (Pa. Cmwlth. 1985) (“Section 404(d) relates to
deductions from compensation and pertains to employees who have already been
determined to be eligible under Section 404(a).”). Severance pay deductions do not
suspend, delay, or extend the period of eligibility; they simply reduce the dollar
9
amount of each UC benefit payment to which they are allocated. See 43 P.S.
§804(d)(1). In other words, severance pay allocations reduce the overall amount of
a claimant’s UC benefits, but have no effect on the time period of eligibility for UC
benefits. They do not extend the claimant’s benefit year.
Contrary to Claimant’s suggestion, the record does not indicate she was
found ineligible for UC benefits from May 2016 until January 2017. See C.R., Item
#11 at 8, 9. Rather, she became eligible upon her separation from employment for
26 weeks of UC benefits, subject to deductions from her benefits based on her
severance pay. Id. at 8. Claimant received payments of UC benefits for only 14
weeks because only 14 weeks of eligibility remained in her benefit year after
deduction of the allocated portions of her severance payment from her UC benefit
payments as set forth in the Department’s determination on the 2016 Application.
B. Alleged Misinformation from UC Representatives
Claimant also contends UC representatives gave her incorrect
information in two ways. First, she asserts two UC representatives came to her
worksite to provide information and advice to the employees before Employer
closed the plant. Claimant argues she relied on their instruction to apply for UC
benefits immediately despite receiving severance pay. Second, she contends she
telephoned the Department repeatedly concerning the cessation of UC benefits.
Claimant complains she received conflicting information from various Department
personnel concerning whether she should file the 2017 Application in April 2017 or
seek further UC benefits by attempting to extend her benefit year under the 2016
Application.
10
Claimant’s argument concerning the allegedly incorrect information is
not well developed. However, she appears to suggest her ineligibility for further UC
benefits resulted from the course of conduct she followed in relation to the 2016 and
2017 Applications based on incorrect information provided by UC representatives.
We discern no merit in this argument.
Regarding Claimant’s assertion that UC representatives met with
employees at her workplace, Claimant offered no evidence to support her averment
that they were in fact UC representatives. To the contrary, when questioned by the
referee concerning that issue, Claimant conceded she just assumed the people who
came to her workplace were from the Department. Referee’s Hr’g, Notes of
Testimony, 8/8/17, at 7.
Claimant also contends the alleged UC representatives stated that
although employees would not initially receive UC benefits because of their
severance pay, they would receive UC payments for 26 weeks once the payments
started. That alleged statement was inaccurate as applied to Claimant. As explained
above, the attribution of Claimant’s severance pay left only 14 weeks of eligibility
remaining in her benefit year.
However, the Department’s determination mailed to Claimant on May
8, 2016 clearly stated that her benefit year would run from May 1, 2016 through
April 29, 2017. C.R., Item #11 at 9. The Department’s determination mailed to
Claimant on May 18, 2016 stated her severance deductions would reduce her
benefits to $0 until January 7, 2017. Id. at 8. Claimant could readily discern from
11
this determination that by the time her severance deductions ended, there would be
only 14 weeks, not 26, remaining in her benefit year.4
Finally, Claimant contends she received conflicting information in
2017 concerning whether she should seek further UC benefits under the 2016
Application after the end of her benefit year, or whether she should file a new
application. In its decision, the Board found that any attempt to change Claimant’s
benefit year under the 2016 Application would have been untimely.5 Bd. Op.,
12/26/17 at 2. On appeal, Claimant does not challenge that finding. Thus, the
conflicting information from the Department, if any, could not have affected
Claimant’s eligibility for further UC benefits. Her request to alter her benefit year
would have been due in late January 2017. Thus, she was already ineligible before
she began her alleged inquiries.
In short, Claimant fails to demonstrate that she received any incorrect
information from the Department, or that she acted on any such information in a way
that reduced the UC benefits she received.
4
Both Department determinations concerning the 2016 Application included appeal
instructions and notices of the applicable appeal deadlines. Certified Record, Item #11 at 8, 9. As
noted above, Claimant never appealed either determination.
5
Under 34 Pa. Code §65.56(a)(1)(i), a claimant must file any request to withdraw a UC
benefit application and cancel the corresponding benefit year no later than 15 days after the
Department issues the claimant’s first payment of UC benefits.
12
IV. Conclusion
Based on the foregoing, we affirm the decision of the Board.
ROBERT SIMPSON, Judge
13
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Denise Jennings, :
Petitioner :
:
v. : No. 216 C.D. 2018
:
Unemployment Compensation :
Board of Review, :
Respondent :
ORDER
AND NOW, this 7th day of September, 2018, the order of the
Unemployment Compensation Board of Review is AFFIRMED.
ROBERT SIMPSON, Judge