For more than 20 years, Pennsylvania retirees who accepted an early retirement incentive plan have been denied unemployment compensation benefits under the Unemployment Compensation Law (UC law). The Supreme Court of Pennsylvania departed from well-established precedent on December 28, 2012, opening the door for early retirees to qualify for unemployment compensation.

In Diehl v. Unemployment Compensation Board of Review, the court considered whether the “voluntary layoff option” proviso (VLO proviso), found at Section 402(b) of the UC law, “permits employees to receive unemployment compensation benefits when they accept an early retirement plan offered pursuant to an employer-initiated workforce reduction.” The claimant in the case — like many before him — accepted such a plan and was denied benefits under a long-standing line of cases holding that the VLO proviso does not allow for such benefits.