IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Philadelphia Regional Port Authority, :
Petitioner :
:
v. : No. 1106 C.D. 2017
: Argued: June 6, 2018
Unemployment Compensation Board :
of Review, :
Respondent :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE ELLEN CEISLER, Judge
OPINION
BY PRESIDENT JUDGE LEAVITT FILED: July 20, 2018
The Philadelphia Regional Port Authority (Employer) petitions for
review of an adjudication of the Unemployment Compensation Board of Review
(Board) that granted benefits to Rosemary Boyle (Claimant). In doing so, the Board
affirmed the decision of the Referee that Claimant was eligible for benefits under
Section 402(b) of the Unemployment Compensation Law (Law)1 because she opted
to participate in a voluntary separation incentive program offered by Employer. For
the following reasons, we affirm the Board.
Background
Claimant began working for Employer as an administrative assistant on
May 28, 2002. On January 20, 2017, Claimant separated from Employer as a result
of her participation in a “Voluntary Separation Incentive Program” offered by
1
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(b).
Employer. Certified Record (C.R.) Item No. 9, Exhibit C-1, at 1. Claimant applied
for unemployment compensation benefits, stating she was forced to “retire for
downsizing reasons.” C.R. Item No. 2, at 3. On February 21, 2017, the Scranton
UC Service Center issued a Notice of Determination finding Claimant eligible for
benefits under Section 402(b) of the Law because “she accepted an incentive” for a
layoff. C.R. Item No. 5, at 1. Employer appealed, and a hearing was conducted by
a Referee.
At the hearing, Claimant presented a November 28, 2016, written
memorandum that Employer sent to all employees stating that Employer would
reduce its workforce by 30 percent and would eliminate positions “across all levels
and functional areas.” C.R. Item No. 9, Exhibit C-1 at 1. The memorandum stated
that under its Voluntary Separation Incentive Program, any employee who
participated would receive $1,500 for each year of service, up to a maximum of
$25,000. Claimant testified that she believed that her position would be eliminated
because she “had a supervisor that constantly asked [her] when [she was] retiring.”
Notes of Testimony (N.T.), 3/29/2017, at 7. Further, management had advised
several employees that they were “safe” from the forthcoming terminations, but
Claimant did not receive this assurance. N.T. at 9. For these reasons, Claimant
opted to participate, and on December 19, 2016, she executed a Separation and
Release Agreement. However, on December 28, 2016, Claimant sent a note to
Employer’s human resources department, stating that she executed the Separation
and Release Agreement under duress and would have preferred to continue to work.
On cross-examination, Claimant conceded that she did not know with certainty that
her position would be eliminated, but chose to participate in the incentive program
because she feared losing her job and her health insurance.
2
Edward Henderson, Director of Finance, testified on behalf of
Employer. Because of overstaffing, Employer developed the Voluntary Separation
Incentive Program to minimize involuntary terminations. Claimant received
$22,050 for her participation. Henderson could not say whether Claimant would
have been involuntarily terminated had she chosen to stay.
The Referee affirmed the determination of the Service Center. The
Referee held that Claimant was eligible for benefits under the Voluntary Layoff
Option (VLO) Proviso of Section 402(b) of the Law, which states as follows:
An employe shall be ineligible for compensation for any week –
***
(b) In which his unemployment is due to voluntarily leaving
work without cause of a necessitous and compelling
nature…Provided further, That no otherwise eligible claimant
shall be denied benefits for any week in which his unemployment
is due to exercising the option of accepting a layoff, from an
available position pursuant to a labor-management contract
agreement, or pursuant to an established employer plan,
program or policy[.]
43 P.S. §802(b) (emphasis added). The Referee explained the significance of the
VLO Proviso as follows:
The Pennsylvania Courts have held the [VLO] Proviso applies to
claimants who leave employment voluntarily pursuant to a labor
management contract agreement or pursuant to an established
employer plan, program or policy, regardless of whether the
layoff is temporary or permanent in nature, and includes
employer initiated early retirement packages offered pursuant to
a workforce reduction.
Here, the Referee finds that the Employer’s Voluntary
Separation Incentive Program which was established due to a
30% reduction in staff that the Employer was anticipating falls
within the provisions of the VLO Proviso. The Claimant
3
resigned to accept a financial incentive as part of an employer-
initiated workforce reduction plan.
The Claimant is “otherwise eligible” as she remained able and
available for suitable work. The Referee credits the testimony of
the Claimant that she wanted to continue working for the
Employer and advised the Human Resources Director that she
believed that her position would be eliminated, and that was the
reason she was accepting the incentive program.
Therefore, benefits are granted, under the VLO Proviso and
Section 402(b) of the Pennsylvania Unemployment Law.
Referee Decision and Order, 3/30/2017, at 3; Reproduced Record at 7a (R.R.__).
Employer appealed to the Board, arguing that the VLO Proviso was
inapplicable to its Voluntary Separation Incentive Program. First, it was not an
“established” plan and, second, Claimant’s position had not been targeted for
elimination. Both elements, Employer argued, are essential requirements of the
VLO Proviso. The Board rejected Employer’s argument and adopted the findings
of fact and conclusions of law of the Referee. Employer then petitioned for this
Court’s review.
Appeal
On appeal,2 Employer raises two issues. First, it argues that it was
denied due process because the VLO Proviso was not specified in the UC Service
Center’s determination and, thus, Employer did not know it would be an issue before
the Referee. Second, Employer argues the Board erred in finding that Employer’s
Voluntary Separation Incentive Program was an “established plan” under the VLO
2
In reviewing the Board’s adjudication, this Court determines whether an error of law was
committed, whether constitutional rights were violated, or whether necessary findings of facts are
supported by substantial evidence. Section 704 of the Administrative Agency Law, 2 Pa. C.S.
§704; Brown v. Unemployment Compensation Board of Review, 49 A.3d 933, 936 n.4 (Pa.
Cmwlth. 2012).
4
Proviso because Claimant’s position was not specifically targeted for elimination.
Claimant responds that Employer waived its due process argument by not raising it
before the Board and, in any case, the Board properly interpreted the VLO Proviso
in Section 402(b) of the Law.
I. Due Process
In its first issue, Employer asserts that the Referee raised the VLO
Proviso sua sponte. The UC Service Center held that Claimant was entitled to
benefits because she had left work for “cause of a necessitous and compelling
nature” under Section 402(b) of the Law. C.R. Item No. 5, at 1. Because Employer
did not know the VLO Proviso was going to be an issue at the hearing, it was denied
due process.
Claimant responds that Employer waived its due process challenge by
not raising it in its appeal before the Board. Reading Nursing Center v.
Unemployment Compensation Board of Review, 663 A.2d 270, 275 (Pa. Cmwlth.
1995) (holding employer’s due process claim was waived by failing to raise it before
the Board). In any case, the UC Service Center’s determination found Claimant
eligible under Section 402(b) of the Law, which includes the VLO Proviso.
In an unemployment compensation proceeding, the referee considers
the issues “expressly ruled upon” by the local service center, unless the parties agree
otherwise. 34 Pa. Code §101.87.3 The UC Service Center found Claimant eligible
3
Section 101.87 of the Department’s regulations states:
When an appeal is taken from a decision of the Department, the Department shall
be deemed to have ruled upon all matters and questions pertaining to the claim. In
hearing the appeal the tribunal shall consider the issues expressly ruled upon in the
decision from which the appeal was filed. However, any issue in the case may,
5
because she “accepted an incentive because her job was being eliminated.” C.R.
Item No. 5, at 1; Finding of Fact No. 2. It also found she had “no alternatives.” Id.
at Finding of Fact No. 3. The Notice further explained that having no alternatives
constitutes a necessitous and compelling reason to leave a job. The UC Service
Center then concluded on the basis of these factual findings that Claimant was
eligible “under” Section 402(b) of the Law. Id.
The words “VLO Proviso” do not appear in the UC Service Center’s
Notice of Determination. However, Employer’s incentive plan was addressed by
the UC Service Center in its factual findings, and it was included in the reference to
Section 402(b) of the Law. Notably, the evidence developed by Employer at the
Referee’s hearing pertained to the VLO Proviso. We reject the premise to
Employer’s due process argument that the Referee raised the VLO Proviso sua
sponte and, thus, we reject Employer’s due process claim.
II. VLO Proviso
In its second issue, Employer argues that the Board has misconstrued
the VLO Proviso in Section 402(b) of the Law. The Board responds that Employer’s
Voluntary Separation Incentive Program is precisely the type of plan contemplated
by the VLO Proviso.
We begin with a review of Section 402(b) of the Law. It makes an
employee ineligible for compensation for any week “[i]n which his unemployment
is due to voluntarily leaving work without cause of a necessitous and compelling
nature.” 43 P.S. §802(b). An employee who volunteers for a layoff is generally
with the approval of the parties, be heard, if the speedy administration of justice,
without prejudice to any party, will be substantially served thereby.
34 Pa. Code §101.87.
6
ineligible for compensation, unless he can show a compelling and necessitous reason
for that decision. In 1980, the General Assembly carved out an exception to this
general rule and enacted the VLO Proviso.4 It follows the general language of
Section 402(b) and states:
That no otherwise eligible claimant shall be denied benefits for
any week in which his unemployment is due to exercising the
option of accepting a layoff, from an available position pursuant
to a labor-management contract agreement, or pursuant to an
established employer plan, program, or policy….
43 P.S. §802(b).
Following the 1980 amendment, this Court interpreted the word
“layoff” narrowly to mean only “layoffs with recall rights.” W.R. Grace & Co. v.
Unemployment Compensation Board of Review, 455 A.2d 729, 730 (Pa. Cmwlth.
1983). Thus, the VLO Proviso did not apply to employees who accepted an early
retirement or “a permanent separation accompanied by some form of consideration
from the employer.” Beddis v. Unemployment Compensation Board of Review, 6
A.3d 1053 (Pa. Cmwlth. 2010).
This changed with our Supreme Court’s ruling in Diehl v.
Unemployment Compensation Board of Review, 57 A.3d 1209 (Pa. 2012), wherein
Beddis was explicitly overruled. In Diehl, the employer announced a reduction in
workforce and identified 20 employees who would be laid off in accordance with
the collective bargaining agreement. To reduce the number of involuntary layoffs,
the employer offered an early retirement program to employees over 60 years of age,
which included health insurance coverage for five years and a payout for unused
vacation time. One employee accepted the retirement package, assuming that he
4
Act of July 10, 1980, P.L. 521.
7
would be eligible for unemployment benefits. When he was denied benefits, the
employee appealed to this Court. Relying on decades of precedent that the VLO
Proviso does not apply to early retirement packages, this Court affirmed the Board.
The employee appealed to our Supreme Court, which granted allocatur.
Recognizing that the Law does not define “layoff,” the Supreme Court
concluded that the term should be construed consistent with “common parlance,”
which encompasses “both temporary and permanent separations initiated by the
employer.” Diehl, 57 A.3d at 1218 (citing BLACK’S LAW DICTIONARY 614 (abr. 6th
ed. 1991)). It then considered whether an early retirement plan offered in the context
of a workforce reduction is the equivalent of “an option of accepting a layoff.” The
Supreme Court concluded that they were the same, reasoning as follows:
The early retirement package in the case at bar appears to fit
within [the VLO Proviso] given that it is clearly a termination of
employment that was offered at the will of the [e]mployer.
Here, [e]mployer initiated and announced a workforce reduction
in accordance with its contract with the union, naming twenty
employees who would be discharged on a date certain, with a
sub-list of ten individuals who would be “retained to fill
vacancies pending the results of the Early Retirement Offer.”
Had [e]mployee not accepted the early retirement offer, another
less-senior employee would have been laid off and would have
been eligible for unemployment compensation. Given that we
must interpret eligibility sections broadly in favor of the
employee, we find no language that prevents the interpretation
of the term layoff to include this employer-initiated, early
retirement packages [sic] offered pursuant to a workforce
reduction.
Diehl, 57 A.3d at 1222 (emphasis added).
Employer concedes that Diehl has clarified the meaning of “layoff.”
However, Employer focuses on the phrase in the statute that follows “layoff,” i.e.,
8
that a layoff must be implemented under “an established employer plan, program or
policy.” 43 P.S. §802(b) (emphasis added). Employer argues that the term
“established” was not intended to apply to its Voluntary Separation Incentive
Program.
Employer maintains that the enactment of the VLO Proviso was the
result of “share the work” programs that were common in the 1960s and 1970s. See
Daniel R. Schuckers & James K. Bradley, The Proper Use of the Declaration of
Public Policy Section of the Pennsylvania Unemployment Compensation Law, 87
DICK. L. REV. 507, 510-16 (1983). These programs identified the employees who
would separate first in the event of a workforce reduction. Employees who were
laid off in accordance with the program were not eligible for unemployment benefits
because they had “agreed” to the layoff plan in their collective bargaining
agreements. Courts questioned whether these separations were “truly voluntary.”
See, e.g., Warner Co. v. Unemployment Compensation Board of Review
(Gianfelice), 153 A.2d 906 (Pa. 1959). With the enactment of the VLO Proviso, the
order of the layoffs established in a collective bargaining agreement did not render
the employee ineligible for unemployment benefits. Employer argues that an
“established plan,” as used in Section 402(b) of the Law, refers only to a plan to
which the employee had agreed long before the need for its use, such as in a
collective bargaining agreement.
Employer asserts that to be “established” for purposes of the VLO
Proviso, the “plan” must target specific employees. The layoff must be from an
“available position” that another employee can, and will, fill. Employer concedes
that in Diehl the Supreme Court did not expressly state that an employee must have
9
agreed to the plan before it is invoked by the employer or that the plan must target
specific employees. However, those were the facts in Diehl.
Further, post-Diehl, this Court has applied the VLO Proviso only where
the employer’s plan targeted specific employees; thus, they were plans similar to the
aforementioned “share the work” programs. See, e.g., Naval Surface Warfare
Center Carderock Division v. Unemployment Compensation Board of Review, 106
A.3d 256 (Pa. Cmwlth. 2014) (Naval Surface) (employer offered various employees
a voluntary early retirement plan in order to “reshape” its workforce); Department
of Army Depot v. Unemployment Compensation Board of Review (Pa. Cmwlth., No.
1715 C.D. 2015, filed July 6, 2015) (employer offered a voluntary separation
program to eligible third-shift employees).
The Board responds that Employer is construing the VLO Proviso in a
way not supportable by the actual language of Section 402(b) of the Law. Further,
the Board maintains that Employer has misconstrued the case law.
The VLO Proviso does not state that an “established” plan must be
established in a collective bargaining agreement or agreed to by the employee prior
to the need arising for the plan’s implementation. The VLO Proviso states, simply,
that a claimant is eligible for benefits after “accepting a layoff, from an available
position pursuant to a labor-management contract agreement, or pursuant to an
established employer plan, program, or policy….” 43 P.S. §802(b) (emphasis
added). The word “established” merely requires that the employer have instituted a
formal plan, program or policy. It neither states nor implies that the plan must be in
place prior to the need for the plan arising.
In Diehl, employer’s plan was not “established” as Employer would
define the word. There, the employer issued a memo listing 20 employees scheduled
10
for layoff in accordance with a provision of the collective bargaining agreement and
offered an early retirement incentive plan to senior employees. This early retirement
plan was not part of the collective bargaining agreement. Rather, the early retirement
plan was developed at the time of the workforce reduction to reduce the need for
involuntary layoffs. The Supreme Court considered this to be an “established plan”
for purposes of the VLO Proviso. Similarly, in Naval Surface, the employer offered
its employees a voluntary early retirement program when it decided to reshape its
workforce. There was no evidence that any employee had previously agreed to
accept an early retirement in the event of a workforce reduction.
Employer’s argument that a “plan” must target specific employees
likewise fails. In Diehl, the Supreme Court stated that the employee could claim the
benefit of the VLO Proviso even if his position was not targeted for elimination. It
explained as follows:
[T]o the extent the Commonwealth Court has refused to apply
the VLO Proviso because employees voluntarily accepted early
retirement packages or because their jobs were not in danger if
they did not accept the package, we reject that analysis which is
not supported by the language of the statute requiring an
employee’s “acceptance” of the layoff option and the existence
of “an available position.”
Diehl, 57 A.3d at 1221 (emphasis added). We followed this logic in Naval Surface,
explaining that “[t]he fact that [c]laimant’s early retirement wasn’t forced and that
he could have remained in his position brings [c]laimant within the VLO Provision;
it does not exclude him.” Naval Surface, 106 A.3d at 262.
Conclusion
The plain language of the VLO Proviso does not support Employer’s
contention that a “plan” must be one that targets specific employees, or positions,
11
and must have been agreed to by the separating employee in advance of its need.
Neither Diehl nor its progeny support Employer’s proffered requirements. Claimant
accepted a layoff from an available position pursuant to Employer’s Voluntary
Separation Incentive Program. As the Board correctly determined, Claimant is
eligible for benefits under the VLO Proviso. Accordingly, we affirm the Board’s
decision.
______________________________________
MARY HANNAH LEAVITT, President Judge
12
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Philadelphia Regional Port Authority, :
Petitioner :
:
v. : No. 1106 C.D. 2017
:
Unemployment Compensation Board :
of Review, :
Respondent :
ORDER
AND NOW, this 20th day of July, 2018, the order of the Unemployment
Compensation Board of Review dated July 12, 2017, in the above-captioned matter
is hereby AFFIRMED.
______________________________________
MARY HANNAH LEAVITT, President Judge