Some changes in Pennsylvania's Unemployment Compensation Law (the "UC Law") have sparked debate as to how the changes may impact employers.
In response to a federal mandate, Pennsylvania amended the UC Law in late 2013 to put additional pressure on employers to respond to requests related to unemployment compensation---and to do so timely and honestly. Specifically, the law provides that an employer's reserve account will be charged for overpayments paid to claimants because the employer responded in an untimely fashion or failed to respond to a request for information from the state. To avoid this potential charge, an employer must file a response with the state within fourteen days after the request for information is sent. Furthermore, an employer's response will be considered inadequate if "the response misrepresents or omits facts that, if represented accurately or disclosed" would have been the basis for denying a claimant benefits. The UC Law also provides that a person who makes a false statement, misrepresentation, or omission of a material fact to obtain or increase UC benefits for himself/herself or for another person can be convicted of a summary offense and subject to fines and imprisonment.
So what does this really mean? Many employers often elect not to respond to the initial request for information from the UC Service Center to avoid further conflicts with the former employee or as part of a formal separation agreement that includes a waiver of the former employee's claims against the employer. These separation agreements often contain language along the lines of "for consideration of the promises set forth in this Agreement, Employer agrees that it will not contest Employee's application for unemployment compensation benefits."
An employer's failure to respond to the UC Service Center's initial request for information could present a potential conflict with Pennsylvania's amended UC law, as the Employer could be making a promise to an employee it cannot (or at least should not) keep. For example, if an employee has committed an act of willful misconduct or voluntarily resigned and is receiving a severance package as part of his/her termination, the employer could not keep its promise to "not contest" the employee's application for benefits and truthfully respond to a request for information from the state. If an employee is terminated due to willful misconduct or quits without necessitous and compelling cause, he/she may be deemed ineligible for unemployment benefits.
So long as the employer responds truthfully to the request for information, it should not have any further obligation to contest the claim. Thus, if the employee's claim for benefits is denied by the UC Service Center and the employee files an appeal, the employer should have no obligation to attend a subsequent Referee's hearing.
Employers no longer can choose whether and when to respond to requests for information from the UC Service Center without creating potential risk. With the evolving unemployment compensation landscape, employers should reconsider how they approach the UC question with separating employees, especially in situations involving formal separation agreements.