RULES AND REGULATIONS
Title 34—LABOR
AND INDUSTRY
DEPARTMENT OF
LABOR AND INDUSTRY
[ 34 PA. CODE CH. 61 ]
Unemployment Compensation; Administration
[41 Pa.B. 844]
[Saturday, February 12, 2011]The Department of Labor and Industry (Department), Office of Unemployment Compensation Benefits and Office of Unemployment Compensation Tax Services, amends Chapter 61 (relating to administration).
A. Statutory Authority
This final-form rulemaking is promulgated under section 201(a) of the Unemployment Compensation Law (law) (43 P. S. § 761(a)), which authorizes the Department to promulgate and amend rules and regulations necessary to administer the law.
B. Background and Description of this Final-Form Rulemaking
This final-form rulemaking, which covers ten sections of Chapter 61, updates the Department's regulations to conform to current law and practice. The particular changes are as follows.
Section 61.1 (relating to definitions) contains definitions for Part II, Subpart A (relating to unemployment compensation). Definitions regarding the organization of the Department are amended or added to reflect the current structure of the Department. Also, obsolete definitions are deleted.
Section 61.3 (relating to wages) is amended to distinguish the tax treatment of delayed wage payments from the existing approach that will continue to be used for benefit purposes. For purposes of taxation, this section will treat wages as paid on the date the employer actually pays them. This treatment reflects the decision of the United States Supreme Court in United States v. Cleveland Indians Baseball Company, 532 U.S. 200 (2001). In that case, the Court held that, for Federal employment tax purposes, back wages should be attributed to the date on which they actually are paid. The Department is required to follow this decision when allocating wages for tax purposes because section 4(x)(6) of the law (43 P. S. § 753(x)(6)) requires that payments subject to taxation under the Federal Unemployment Tax Act (26 U.S.C.A. §§ 3301—3311) also are taxed as wages under the law. For benefits purposes, however, the existing treatment of wages remains in effect. That is, when a payment of wages is delayed, the wages are considered paid on the day on which the employer generally pays amounts definitely assignable to a payroll period.
This section also is amended regarding the valuation of remuneration made in mediums other than cash. In addition to prescribing the general rule that the value of noncash compensation is its fair market value, the regulation specifies minimum values to be placed on meals and lodging by reference to recognized Federal standards, subject to rebuttal by the employer.
When sick pay is paid to a worker by a third party, § 61.3a (relating to third party sick pay) provides that the third party is responsible to report and pay unemployment compensation (UC) taxes on the sick pay. An exception provides that the third party may meet certain requirements in order to shift that responsibility to the employer.
Section 61.11 (relating to persons eligible for compensation and expenses) provides that an agent of an employer, like the employer he represents, is ineligible for witness fees for participating in an administrative proceeding if the employer is an interested party in the proceeding.
The final-form amendments to § 61.12 (relating to reimbursable items) delete specific amounts for the mileage allowance and the per diem fee for witnesses. As amended, this section provides that witnesses may be paid compensation and expenses in accordance with 42 Pa.C.S. (relating to Judicial Code).
Sections 61.21—61.25 are rescinded and replaced by § 61.25 (relating to confidentiality of information and fees), which implements new Federal confidentiality requirements that were recently promulgated by the United States Department of Labor.
C. Comments
Notice of proposed rulemaking was published at 40 Pa.B. 2639 (May 22, 2010). The Department received comments from Interstate Tax Services, Inc. (ITS), Community Legal Services (CLS) and the Independent Regulatory Review Commission (IRRC). The Senate Labor and Industry Committee and the House Labor Relations Committee did not comment.
§ 61.1. Definitions
Comment: This rulemaking changes the definition of ''Bureau'' from ''Bureau of Employment Security of the Commonwealth'' to ''the Department.'' Because ''Department'' is already defined in § 61.1, IRRC questioned the need for the revised definition of ''Bureau'' and suggested that it be eliminated.
Response: There is no longer a Bureau of Employment Security within the Department. However, this final-form rulemaking and the companion rulemaking concerning Chapter 65 (relating to employee provisions) do not amend all of the existing regulations in these chapters. See 41 Pa.B. 848 (February 12, 2011). (To accommodate existing references to the ''Bureau'' in the unaffected regulations, the definition of ''Bureau'' is being amended.
§ 61.12. Reimbursable items
Comment: The proposed amendment to this section states, in part, that an individual ''entitled to reimbursement under § 61.11 . . . may be paid compensation and expenses.'' IRRC commented that individuals may be eligible for compensation and expenses but are not necessarily ''entitled'' to them. IRRC suggested that the Department change the language of this section to reflect that compensation and expenses are authorized but not mandatory in every situation.
Response: The Department changed the final-form rulemaking to refer to individuals who are ''eligible'' for compensation and expenses, as suggested by IRRC.
§ 61.25. Confidentiality of information and fees
Comment: Subsection (a)(3)(ii) and (iii) allows disclosure of UC information to a claimant or an employer under certain circumstances. ITS, CLS and IRRC suggested that this section should also allow disclosure to a representative of a claimant or employer. In addition, CLS suggested that this section specify the extent to which a release is required for disclosure to an agent and should excuse the need for a release to the extent allowed by the Federal disclosure rules. IRRC noted that the Federal disclosure rules permit disclosure to an agent only if the disclosure is authorized by state law. IRRC inquired whether disclosure to agents is currently authorized by statute and whether the law would permit the Department to adopt a regulation allowing disclosure to agents.
Response: The Department revised the final-form rulemaking to allow disclosure to an agent, and to contain criteria for disclosure to an agent that is similar to the criteria suggested by CLS. In response to IRRC's questions, the law does not expressly address disclosure of information to an agent of an employer or claimant. The Department's broad regulatory authority in section 201(a) of the law and 207(a)(1) of the law (43 P. S. § 767) permits the Department to adopt a regulation allowing disclosure to agents. See Slippery Rock Area School District v. Unemployment Compensation Board of Review, 603 Pa. 374, 983 A.2d 1231 (2009).
Comment: Subsection (a)(2)(ii) provides that UC information is not competent evidence in any action or proceeding in any court or other tribunal. Subsection (a)(4)(ii) provides that information disclosed by the Department or the Board of Review to a person under the regulation may not be redisclosed by the recipient to another person or before any court or other tribunal. Subsection (a)(5) contains exceptions to these restrictions. One of the exceptions is information disclosed to a claimant or an employer of the claimant under subsection (a)(3)(ii) for the proper determination of the claimant's benefit application and claims. Therefore, a claimant or employer who receives UC information in connection with the determination of the claimant's eligibility for benefits is not prohibited from redisclosing that information or using it as evidence in an action or proceeding outside of the law. CLS commented that the drafting of these provisions so that subsection (a)(2)(ii), (4)(ii) and (5) be read together is confusing.
Response: The exceptions in subsection (a)(5) apply to both subsection (a)(2)(ii) and (4)(ii). Therefore, it is necessary to read subsection (a)(2)(ii) in connection with subsection (a)(5) and, similarly, to read subsection (a)(4)(ii) in connection with subsection (a)(5). Both subsection (a)(2)(ii) and (4)(ii) contain language indicating that they are subject to subsection (a)(5).
Comment: IRRC stated that the Department should clarify its intent regarding the use of information obtained by a claimant during a UC proceeding in other legal forums and revise the regulation accordingly.
Response: The effect of subsection (a)(2)(ii), (4)(ii) and (5) reflects the Department's intent; that is, a claimant or employer who receives UC information in connection with the determination of the claimant's eligibility for benefits is not prohibited from redisclosing that information or using it as evidence in an action or proceeding outside of the law. The Department recognizes the impracticability of attempting to regulate the use of information by a claimant or an employer once the information has been released to them. Revising the regulation is not necessary.
Comment: CLS commented that claimants and employers should be allowed to use UC information, in addition to information provided to them in connection with the determination of the claimant's eligibility for UC, in legal proceedings other than proceedings under the law. CLS also commented that it is unclear whether the use of additional UC information is permitted under the regulation.
Response: Subsection (a)(2)(i) supplies the basic rule: ''Unemployment compensation information is confidential and may be disclosed only as permitted in this subsection.'' Subsection (a)(3) enumerates six circumstances in which the Department or the Board may disclose UC information. Under subsection (a)(3)(ii), disclosure may occur ''[t]o a claimant, the last employer of the claimant, a base year employer of a claimant or a representative of any of the foregoing in accordance with paragraph (7), to the extent necessary for the proper determination of the claimant's application for benefits and claims for compensation.'' As previously discussed, a claimant or an employer of the claimant who receives information in connection with the determination of the claimant's eligibility is not restricted from redisclosing that information or using it in a proceeding outside of the law. However, the list of permissible disclosures in subsection (a)(3) does not include disclosure of UC information to a person, including a claimant or employer, for the purpose of litigation outside of the law. Moreover, the exceptions in subsection (a)(5) that UC information is not competent evidence do not include private litigation.
Comment: CLS questioned whether disclosure of UC information to claimants and employers for the purpose of litigation outside of the law is prohibited by Federal law.
Response: Under 20 CFR 603.4 (relating to what is the confidentiality requirement of Federal UC law), each state is required to maintain the confidentiality of its UC information. Permissible disclosures by a state UC agency that are exceptions to the rule of confidentiality are listed in 20 CFR 603.5 (relating to what are the exceptions to the confidentiality requirement). Disclosure of information about a claimant to an employer, or information about an employer to a claimant, for non-UC purposes is not permitted under 20 CFR 603.5.
Comment: Subsection (b) states, in part, that ''[e]xcept as provided in section 702 of the law (43 P. S. § 862), the Department or the Board may charge a fee to a person seeking documents or information from the Department or the Board.'' Section 702 of the Law provides that ''[n]o employer or employe shall be charged fees of any kind in any proceeding under this act by the department, the board, or any of its officers or agents.'' CLS commented that claimants and claimant representatives should not be charged a fee to obtain records from the Department or the Board.
Response: Because section 702 of the law supersedes the fee provision in subsection (b), a disclosure to a claimant or a claimant representative under subsection (a)(3)(ii) ''to the extent necessary for the proper determination of the claimant's application for benefits and claims for compensation'' will not involve a fee.
Comment: IRRC commented that ''it is unclear as to what the Department or the Board is charging for. What type of documentation or information would require charging a fee.''
Response: Under subsection (b), if a person requests information or documents from the Department or the Board that the Department or the Board possess in connection with the administration of the law, the Department and the Board are authorized to charge a fee to process the request and provide the requested documents or information. However, a fee will not be charged in situations when a fee is prohibited under section 702 of the law. Typically, the Department and the Board provide information to persons who request it in the form of copies of documents, computer printouts, or information in electronic media.
Comment: IRRC asked if a person would be charged for making a telephone inquiry.
Response: The Department will not charge a fee to a person simply because the person has made an information request, whether the request is communicated by telephone or otherwise. The Department will charge for the cost of processing a request for information and, if the requested information is available, the cost of providing the information. Also, it is unlikely that the Department would disclose information by telephone or in response to a telephone request, except information provided to a claimant or an employer of the claimant in connection with the determination of the claimant's eligibility for benefits and information provided to an employer in connection with the employer's UC tax liability or the administration of the employer's account. In accordance with section 702 of the law, a fee would not be charged in these situations.
Comment: Subsection (b) provides that the amount of the fee charged in connection with an information request is the amount necessary to compensate the Department or the Board for the cost to process the request and provide the requested information. The last sentence of the subsection states that ''[t]he amount of the fee will be calculated by the Department within its discretion.'' IRRC commented that the last sentence of this subsection does not establish a binding norm or a standard that can be predicted by the regulated community and suggested that the amount of any fee be included in the final-form rulemaking.
Response: Under section 303(a)(8) of the Social Security Act (42 U.S.C.A. § 503(a)(8)), grant funds received by the Department from the Federal government for the administration of the law may be expended ''solely for the purposes and in the amounts found necessary by the Board [Secretary of Labor] for the proper and efficient administration of such State law. . . .'' Moreover, 20 CFR 603.8(a) (relating to what are the requirements for payment of costs and program income), regarding information disclosure provide that, subject to certain exceptions, ''grant funds must not be used to pay any of the costs of making any disclosure of UC information.'' Because the Department may not use administrative funding provided by the Federal government to pay for the cost of processing information requests and providing information, subsection (b) allows the Department to charge a fee that will recover the Department's costs. A specific schedule of charges is inadequate for this purpose. Costs can inflate, sometimes rapidly. When this occurs, fixed fees in subsection (b) would result in undercharging for a period of time before the regulation can be amended. Some costs may not be anticipated and therefore would be omitted from a fee schedule. Some information requests do not lend themselves to a fixed structure of charges, such as requests that require computer programming. Flexibility with regard to fees is necessary in order to allow the Department to calculate a fee that includes all of the Department's costs.
Although subsection (b) gives the Department discretion, that discretion is not unbridled. It will be exercised for the purpose stated in the regulation; that is, to determine a fee that is sufficient to compensate for the cost for processing and producing the documents or information. Moreover, it is not unusual for a regulation to omit a fee schedule and instead authorize the agency to charge a fee based on the agency's cost. See, for example, 28 Pa. Code § 29.38(c) (relating to reports) (''The Department may set a reasonable per copy fee to cover the cost of making any copies authorized under this section.'') and 4 Pa. Code § 86.3 (relating to policy governing the public areas of the Capitol Complex) (''The Department may charge fees for the use of equipment, power and labor to set up, operate and remove equipment, clean up and for other appropriate requirements.'').
Comment: Section 603.8(b) of 20 CFR provides that ''grant funds may be used to pay costs associated with any disclosure of UC information if not more than an incidental amount of staff time and no more than nominal processing costs are involved in making the disclosure.'' IRRC asked if the Department receives grant funds, how will this Federal provision work in conjunction with subsection (b).
Response: The Department receives grant funds from the United States Department of Labor for the administration of the UC program under sections 301, 302 and 901 of the Social Security Act (42 U.S.C.A. §§ 501, 502 and 1101). Because subsection (b) states that the Department ''may'' charge a fee to process a request for UC information and provide the requested information, the Department would be permitted to abstain from charging a fee if the requirements of the Federal regulation are satisfied. It is the Department's experience, however, that the type of information request for which a fee would be charged under subsection (b) involves more than incidental staff time and nominal costs. Also, it is important to note that a number of information requests that require minimal time and expense individually can have a significant cumulative effect.
D. Affected Persons
Because this final-form rulemaking amends the definitions for the UC regulations, it potentially affects the 280,000 employers covered by the law and the UC claimants who file approximately 617,000 new applications for benefits each year. Specifically, this final-form rulemaking affects payors and recipients of delayed wages and noncash compensation, witnesses at UC administrative proceedings and third party payors of sick pay.
E. Fiscal Impact
Commonwealth and the regulated community
Some provisions of this final-form rulemaking reflect current practice and, as a result, would not involve any fiscal impact. The provision prescribing the date when wages are considered paid for tax purposes and the provision updating the valuation of noncash compensation could affect the amount of UC tax owed by certain employers and the latter provision could cause some claimants to qualify for an increased amount of UC benefits. While the Department is unable to estimate the amount of any monetary impact from these provisions, the number of employers and claimants affected is expected to be small and the overall fiscal impact is expected to be minimal.
Political subdivisions
This final-form rulemaking does not affect political subdivisions, except to the extent that they are employers covered by the law.
General public
This final-form rulemaking does not affect the general public.
F. Paperwork Requirement
This final-form rulemaking will not impose additional paperwork requirements on the regulated community.
G. Sunset Date
The regulations will be monitored through practice and application. Thus, a sunset date is not designated.
H. Effective Date
This final-form rulemaking will be effective upon publication in the Pennsylvania Bulletin with one exception. Section 61.3 will be in effect as to wages paid on or after January 1, 2012.
I. Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on May 7, 2010, the Department submitted a copy of the notice of proposed rulemaking, published at 40 Pa.B. 2639, to IRRC and the Chairpersons of the Senate Labor and Industry Committee and the House Labor Relations Committee (Committees) for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC and the Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Department has considered all comments from IRRC, the Committees and the public.
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on December 15, 2010, the final-form rulemaking was deemed approved by the Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on December 16, 2010, and approved the final-form rulemaking.
J. Findings
The Department finds that:
(1) Public notice of intention to adopt the final-form rulemaking adopted by this order has been given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) A public comment period was provided as required by law, and all comments received were considered.
(3) This final-form rulemaking does not enlarge the purpose of the proposed rulemaking published at 40 Pa.B. 2639.
(4) This final-form rulemaking is necessary and suitable for the administration of the law.
K. Order
The Department, acting under the authority of the law, orders that:
(a) The regulations of the Department, 34 Pa. Code Chapter 61, are amended by amending §§ 61.1, 61.3 and 61.11, by deleting §§ 61.21—61.24 and by adding § 61.3a to read as set forth at 40 Pa.B. 2639; and by amending § 61.12 and adding § 61.25 to read as set forth in Annex A.
(b) The Secretary of the Department shall submit this order, 40 Pa.B. 2639 and Annex A to the Office of General Counsel and the Office of Attorney General for approval as to form and legality as required by law.
(c) The Secretary of the Department shall certify this order, 40 Pa.B. 2639 and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect upon publication in the Pennsylvania Bulletin. Section 61.3 will be in effect as to wages paid on or after January 1, 2012.
SANDI VITO,
Secretary(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 41 Pa.B. 118 (January 1, 2011).)
Fiscal Note: Fiscal Note 12-78 remains valid for the final adoption of the subject regulations.
Annex A
TITLE 34. LABOR AND INDUSTRY
PART II. BUREAU OF EMPLOYMENT SECURITY
Subpart A. UNEMPLOYMENT COMPENSATION
CHAPTER 61. ADMINISTRATION
WITNESS FEES AND EXPENSES § 61.12. Reimbursable items.
(a) Compensation and expenses. An individual who is eligible for reimbursement under § 61.11 (relating to persons eligible for compensation and expenses) and who resides outside the place where his attendance is required, whether the residence is within or without this Commonwealth, may be paid compensation and expenses by the Department in accordance with 42 Pa.C.S. § 5903(b)—(g) (relating to compensation and expenses of witnesses).
(b) Time limit for filing claims. An allowance or fee payable under this section shall be paid only if a claim therefore is filed with the Board or the Department within 30 days from the date of the proceeding.
DISCLOSURE OF OFFICIAL RECORDS AND INFORMATION § 61.25. Confidentiality of information and fees.
(a) Confidentiality.
(1) Definition. For purposes of this subsection, ''unemployment compensation information'' means both of the following:
(i) Information in the possession of the Department or the Board pertaining to the administration of the law which reveals the name or any other identifying particular about an employer, employee or claimant or which could foreseeably be combined with publicly available information to reveal any identifying particular.
(ii) Information obtained directly or indirectly from the Department or the Board that is included in subparagraph (i) while in the possession of the Department or the Board.
(2) Rule of confidentiality.
(i) Unemployment compensation information is confidential and may be disclosed only as permitted in this subsection.
(ii) Except as provided in paragraph (5), unemployment compensation information will not be competent evidence and may not be used in any action or proceeding in any court or other tribunal.
(3) Permissible disclosure. The Department or the Board may disclose or authorize disclosure of unemployment compensation information only as follows:
(i) To officers and employees of the Department and members and employees of the Board in the administration of the law.
(ii) To a claimant, the last employer of the claimant, a base year employer of a claimant or a representative of any of the foregoing in accordance with paragraph (7), to the extent necessary for the proper determination of the claimant's application for benefits and claims for compensation.
(iii) To an employer or a representative of an employer in accordance with paragraph (7), to the extent necessary for the proper determination of the employer's liability for reports and payments under the law and the proper administration of the employer's account.
(iv) To public employees in the performance of their public duties.
(v) As determined by the Department or the Board to be necessary for the proper administration of the unemployment compensation program.
(vi) As permitted by provisions of the law or as required or permitted by Federal law.
(4) Redisclosure prohibited.
(i) Officers and employees of the Department and members and employees of the Board to whom unemployment compensation information is disclosed under paragraph (3)(i) may not disclose the information to any person or before any court or other tribunal, except as authorized by the Department or the Board under paragraph (3).
(ii) Except as provided in paragraph (5), a person, other than an officer or employee of the Department or a member or employee of the Board, to whom unemployment compensation information is disclosed under paragraph (3) or otherwise may not disclose the information to any person or before any court or other tribunal without the prior, written authorization of the Department or the Board. This subparagraph applies to the initial person to whom the information is disclosed and subsequent recipients of the information.
(5) Exceptions. Paragraphs (2)(ii) and (4)(ii) do not apply to the following:
(i) A legal proceeding under the law or a statute administered or enforced by the Commonwealth.
(ii) Information disclosed to a claimant, employer or representative under paragraph (3)(ii) or (iii).
(iii) Information filed with the unified judicial system by the Department or the Board in the administration of the law.
(6) Safeguards. A person to whom unemployment compensation information is disclosed under paragraph (3) shall implement and maintain all safeguards required by the Department to protect the confidentiality of the information and comply with other terms and conditions specified by the Department in connection with disclosure of the information.
(7) Representatives. To receive information under paragraph (3)(ii) or (iii) on behalf of a claimant or an employer, a representative shall present a written author- ization from the claimant or employer being represented, except in the following circumstances:
(i) A written authorization is impossible or impracticable to obtain as determined by the Department within its discretion and the representative presents other evidence of consent as required by the Department.
(ii) The representative is an elected official or a member of his staff performing constituent services and the representative presents reasonable evidence of consent.
(iii) The representative is an attorney and the attorney asserts that he is representing the claimant or employer.
(b) Fees. Except as provided in section 702 of the law (43 P. S. § 862), the Department or the Board may charge a fee to a person seeking documents or information from the Department or the Board. The fee will be an amount sufficient to compensate the Department or the Board for the costs to process the request and, if the requested documents or information are available, the cost to provide the documents and information. The amount of the fee will be calculated by the Department within its discretion.
[Pa.B. Doc. No. 11-249. Filed for public inspection February 11, 2011, 9:00 a.m.]
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