Wednesday, October 5, 2011

How Quitting Can Affect Unemployment Compensation

Quitting your job in PA after a demotion may deny you Unemployment Compensation Benfits.

This issue was determined the Pennsylvania Supreme Court in the matter of Allegheny Valley School v. Pennsylvania Unemployment Compensation Board of Review, 697 A.2d 243 (Pa. 1997). This is all based on the PA Unemployment Compensation statute holding that an employee is ineligible for unemployment compensation if the unemployment is due to voluntarily leaving work (quitting) without cause of a “necessitous and compelling nature.” That last past is legal speak for “a good reason.”

In this case the employee was working as an assistant house manager at AVS at a salary of $ 18,725 per year. AVS then informed him he was being demoted from the assistant house manager position because of his continued inability to perform the responsibilities of the position. AVS then offered the worker different employment but at a lesser wage. The employee refused the offer and quit his job.

He then filed for unemployment compensation benefits. Tthe Office of Employment Security found that there was a necessitous and compelling reason for voluntarily terminating the work with AVS and that claimant was eligible for benefits.

As employers often do, AVS appealed to an unemployment compensation referee. But the referee determined that the demotion and resulting wage reduction created a necessary and compelling reason for claimant's voluntary termination and upheld the initial decision.

Undeterred, AVS appealed to the Unemployment Compensation Board of Review, then the Commonwealth Court and finally to the Supreme Court of PA. It was only at the level of the Supreme Court that the decision was finally overturned.

As a result of the Supreme Court’s decision, the law in PA now is that a claimant does not have “necessary and compelling reasons” (i.e. good cause) to voluntarily terminate his employment if the demotion was justified due to the claimant's fault. On the flip side, a claimant will have good cause to voluntarily terminate employment if the demotion was unjustified. If a claimant refuses to accept a justified demotion and voluntarily quits, the claimant is ineligible for benefits under 43 Pa. Cons. Stat. §802(b) because he is unemployed as a result of his own fault and he terminated his employment without a necessitous and compelling reason.

A couple other things to keep in mind when you are considering applying for unemployment compensation:

Voluntarily quitting a job does not automatically prevent you from receiving unemployment compensation benefits. To the contrary, a claimant is entitled to benefits if he has "necessitous and compelling" reasons for voluntarily terminating his employment. 43 Pa. Cons. Stat. § 802(b). But, the party alleging that the voluntary termination is based on "necessitous and compelling" reasons (you!) bears the burden of proving the same.

It can be said that "good cause" for voluntary leaving one's employment (i.e. that cause which is necessitous and compelling) results from circumstances which produce pressure to terminate employment that is both real and substantial, and which would compel a reasonable person under the circumstances to act in the same manner.

As you can see, claims for unemployment compensation benefits in Pittsburgh, PA and surrounding areas can get complicated. If your employer is giving you trouble, contact a lawyer immediately.

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