Subchapter E. ELIGIBILITY IN CONJUNCTION WITH
OTHER PAYMENTS
VACATION PAY
65.91. Type of pay.
65.92. Determination of eligibility.
65.93. Reductions in unemployment compensation.
65.94. Identification of vacation periods.
65.95. Time of payment.
65.96. Calculation of vacation period.
RETIREMENT PENSIONS AND ANNUITIES
65.101. Purpose.
65.102. Application of the deduction.
65.103. [Reserved].
65.104. Initial payments.
65.105. Lump-sum retirement payments.
65.106. [Reserved].
65.107. [Reserved].
65.108. Rules of arbitration.
VACATION PAY
§ 65.91. Type of pay.
(a) Whether a payment constitutes vacation pay for purposes of this subchapter shall depend on the purpose for which it is in fact paid or payable rather than the label which may have been given to the payment or to the fund from which it is paid. Unemployment compensation may not be used to finance vacations.
(b) When a plant or department-wide period is granted for vacation and vacation pay is payable to an individual, he may not claim the period is a layoff for him due to lack of work and that his vacation pay should be assignable to some other period, so as to obtain unemployment compensation for one vacation with vacation pay from the employer for another.
(c) The Superior Court has, in effect, held that where the employer of the claimant has designated or approved a vacation period for him, other than the general vacation shutdown, any vacation pay he receives shall first be allocated to the special vacation period the employer has designated or approved for him.
(d) Apart from section 404 of the law (43 P. S. § 804), claimant may not meet the employment tests of eligibility for unemployment compensation while he is actually taking a vacation from work.
Source The provisions of this § 65.91 adopted July 1, 1969.
§ 65.92. Determination of eligibility.
In determining the eligibility of a claimant to whom vacation pay is paid or payable, it shall be considered immaterial whether the vacation pay is paid directly by an employer or through some other person or organization, so long as it originates from employer payments. The principles stated in this section shall also apply whether or not the vacation pay is legally required to be paid. It shall be the responsibility of any employer who provides for vacation pay for his employes to notify the Department in writing of this fact.
Source The provisions of this § 65.92 adopted July 1, 1969.
§ 65.93. Reductions in unemployment compensation.
Unemployment compensation otherwise payable to an individual with respect to any week shall be reduced by the amount of vacation pay which is in excess of the claimant’s partial benefit credit paid or payable to him with respect to all or any part of a vacation period included within that week. Thus, an employe is not rendered totally ineligible by the receipt of vacation pay, but only to the extent of the amount of vacation pay, which is in excess of his partial benefit credit, that he receives with respect to that period.
Source The provisions of this § 65.93 adopted July 1, 1969; amended March 7, 1975, effective March 8, 1975, 5 Pa.B. 441. Immediately preceding text appears at serial pages (9323) to (9324).
§ 65.94. Identification of vacation periods.
For the purposes of this subchapter, the term ‘‘vacation period’’ means the following:
(1) A period designated or approved by the claimant’s employer as his vacation.
(2) The period of any plant-wide or departmental closing for vacation except to the extent that the employer of the claimant has granted him a separate vacation period in substitution, in whole or in part, for the general shutdown.
Source The provisions of this § 65.94 adopted July 1, 1969.
Notes of Decisions Vacation Period
Because there is a presumption of eligibility attached to involuntarily unemployed claimants, and to effectuate the legislative intent underlaying the definition and application of ‘‘credit week’’ as a condition of eligibility, every week of vacation time, scheduled or unscheduled, earned during a base year must be allocated as a ‘‘credit week.’’ Poola v. Unemployment Compensation Board of Review, 555 A.2d 97 (Pa. 1989).
A temporary employer shutdown was properly allocated as a vacation period; and, therefore, claimant was not entitled to collect unemployment despite claimant’s contention that the employer’s decision to shut down was merely a negotiating strategy. Appel v. Unemployment Compensation Board of Review, 556 A.2d 973 (Pa. Cmwlth. 1989).
Although employer complied with terms of bargaining agreement permitting 2 week annual shutdown for vacation, the shutdown did not meet the definition of ‘‘vacation’’ since employes were not required to use available vacation leave during shutdown and, in fact, took approved vacation leaves later in year. The employes simply were not ‘‘scheduled’’ to work as opposed to being ‘‘excused’’ from working. Iceland Products v. Unemployment Compensation Board of Review, 492 A.2d 457 (Pa. Cmwlth. 1985).
§ 65.95. Time of payment.
(a) Vacation pay shall be deemed to have been paid with respect to the vacation period irrespective of the time it is actually received by the claimant if it is for the calendar year in which the vacation period occurs.
(b) If, at the time of the vacation period, the claimant, due to insufficient service, has not yet established entitlement to vacation pay but will later accumulate the necessary amount of service, and if the claimant or his bargaining agent has not agreed to the particular time of the vacation period, the vacation pay may not be allocated to the vacation period.
Source The provisions of this § 65.95 adopted July 1, 1969.
§ 65.96. Calculation of vacation period.
The Department shall determine the number of days or weeks of the vacation period to which the vacation pay shall be applied by dividing the total amount of vacation pay by the regular full-time daily or weekly wage of the claimant. When the allocation of the payment is made on the basis of the number of days, the payment shall be apportioned to the customary working days in the calendar week.
Source The provisions of this § 65.96 adopted July 1, 1969.
Notes of Decisions Calculation
Unemployment compensation Board was not able to reapportion yearly vacation pay between two periods since it had already made a finding of fact that excess earnings made in a particular month were allocable only to that month and as such the Board would be requesting an alternative factual finding unsupported by substantial evidence. LaSota v. Unemployment Compensation Board of Review, 547 A.2d 865 (Pa. Cmwlth. 1988).
RETIREMENT PENSIONS AND ANNUITIES
§ 65.101. Purpose.
(a) In accordance with section 404(d)(2) of the law (43 P. S. § 804(d)(2)), section 402(c) of the Internal Revenue Code of 1986 (26 U.S.C.A. § 402(c)) and section 3304(a)(15) of the Federal Unemployment Tax Act (FUTA) (26 U.S.C.A. § 3304(a)(15)), the Department has promulgated regulations governing the deduction of certain pension payments from unemployment compensation benefits (UC benefits).
(b) The Department has balanced the interests of employes and employers of this Commonwealth, consistent with the law. The Department seeks to maximize the Commonwealth’s share of competitive employment in a global economy, thereby serving the needs of all Pennsylvanians by reducing the number of unemployed individuals and ensuring that UC benefits are available to those who need and are entitled to them.
(c) For any week with respect to which a claimant is receiving certain pension payments, the Department will deduct from the weekly compensation otherwise payable to the claimant the prorated weekly amount of those pension payments which fulfill the prerequisites for deductibility specified in this chapter.
Source The provisions of this § 65.101 adopted July 1, 1969; amended September 3, 1976, effective September 4, 1976, 6 Pa.B. 2107; amended January 2, 1998, effective January 3, 1998, 28 Pa.B. 21. Immediately preceding text appears at serial pages (209612) and (224421).
§ 65.102. Application of the deduction.
(a) Unless otherwise excluded from deductibility under this chapter, any pension payment received by a claimant with respect to a week for which the claimant receives unemployment compensation (UC) benefits shall be deducted from the weekly benefit amount otherwise payable to the claimant for that week.
(b) Deductible pensions include a governmental or other pension, retirement or retired pay, annuity or any other similar periodic payment which is made under a plan maintained or contributed to by the claimant’s base period or chargeable employer and is based on the claimant’s previous work.
(c) Similar periodic payments shall include all deductible pension payments made on other than a weekly basis which shall be prorated into a weekly amount before being deducted from the weekly benefit amount payable to the claimant.
(d) The Department will not deduct pensions paid under the Social Security Act (42 U.S.C.A. § § 301—1397jj) or the Railroad Retirement Act of 1974 (45 U.S.C.A. § § 231—231u), if the claimant contributed to the pension in any amount, and will not deduct Social Security payments that are not based on the claimant’s previous work, such as Suppplemental Security Income.
(e) If the pension is entirely contributed to by the employer, 100% of the prorated weekly amount of the pension will be deducted from the weekly benefit amount payable to the claimant.
(f) If the pension is contributed to by the individual, in any amount, 50% of the prorated weekly amount of the pension will be deducted from the weekly benefit amount payable to the claimant.
(g) The weekly benefit amount payable to the claimant will not be reduced below zero by the prorated weekly amount of the pension.
(h) For any week with respect to which the claimant is not receiving but is eligible for a pension, the Department will not deduct the prorated weekly amount of the pension from the weekly benefit amount payable to the claimant.
(i) If, as a result of the claimant’s ineligibility to receive a pension payment under a pension plan, the claimant receives a payment which represents only a return of the claimant’s own contributions to the plan and does not include any contribution from a base period or chargeable employer, the payment is not a pension and will not be deducted from the weekly benefit amount payable to the claimant.
(j) The Department will not deduct pension payments if the services performed by the individual during the base period or the remuneration received for those services from a base period or chargeable employer did not affect the individual’s eligibility for, or increase the amount of, the pension.
(k) The Department will not deduct periodic payments which are made under severance agreements, profit sharing arrangements or disability plans administered by a union, employer, workers’ compensation carrier, insurance company or the Veterans Administration, unless the payments are based on retirement and fulfill all other prerequisites specified in this chapter.
(l) The Department will not deduct lump sum pension payments which represent the transfer of ‘‘eligible rollover distributions’’ from a ‘‘qualified trust’’ to an ‘‘eligible retirement plan,’’ as those terms are defined in section 402(c) of the Internal Revenue Code (IRC) (26 U.S.C.A. § 402(c)).
(1) If all of the requirements of section 402(c) of the IRC are met, including the transfer of the payments into an ‘‘eligible retirement plan’’ within 60 days of receipt by the individual, those payments do not represent a payment to the individual for the purposes of retirement and are not received by the individual under section 404(d) of the law (43 P. S. § 804(d)) and section 3304(a)(15) of the Federal Unemployment Tax Act (26 U.S.C.A. § 3304(a)(15)) (FUTA).
(2) If a distribution, or any part thereof, does not meet the requirements of section 402(c) of the IRC, the Department will deduct the prorated weekly amount of that portion of the lump sum payment which is received by the claimant in accordance with § 65.108 (relating to rules of attribution).
(3) If a claimant does not roll over the entire lump sum into an eligible retirement plan, as set forth in paragraph (1), the Department will determine the amount to be deducted from the claimant’s weekly benefit amount by dividing the amount of the lump sum payment that is received by the claimant by the total amount the claimant could have received had the claimant opted to take the entire lump sum available to the claimant. That quotient represents the deductible share of the lump sum pension amount received by the claimant. The claimant’s unreduced monthly pension is the amount the claimant could have received each month had the claimant opted to take periodic payments in lieu of a lump sum. The Department will calculate the deductible portion of that unreduced monthly amount by multiplying it by the quotient representing the deductible share of the lump sum which is received by the claimant. Using the deductible amount of that monthly pension, the Department will compute the prorated weekly deductible amount in accordance with § 65.108.
(4) If a claimant presents documented proof to the Department that the claimant has rolled over a portion of a deductible lump sum payment into an eligible retirement plan within 60 days, so that all or some of that lump sum payment is not subject to Federal Income Tax, the Department will credit the claimant for any amount deducted from the claimant’s UC benefits which is properly exempt from deduction because it is attributable to the transfer of the funds into an eligible retirement plan.
Source The provisions of this § 65.102 adopted July 1, 1969; amended November 8, 1974, effective November 9, 1974, 4 Pa.B. 2358; amended September 3, 1976, effective September 4, 1976, 6 Pa.B. 2107; amended January 2, 1998, effective January 3, 1998, 28 Pa.B. 21; amended February 11, 2011, effective February 12, 2011, applies to weeks of unemployment ending on or after December 16, 2005, 41 Pa.B. 848. Immediately preceding text appears at serial pages (239417) to (239418) and (337169).
Notes of Decisions
Excluded Contributions
Employer’s temporary disability salary continuation plan, fully paid and maintained by the employer, was specifically excluded as a deduction by this regulation. York Cable Television, Inc. v. Unemployment Compensation Board of Review, 654 A.2d 270 (Pa. Cmwlth. 1995).
Cross References This section cited in 34 Pa. Code § 65.105 (relating to lump-sum retirement payments).
§ 65.103. [Reserved].
Source The provisions of this § 65.103 adopted July 1, 1969; amended September 3, 1976, effective September 4, 1976, 6 Pa.B. 2107; reserved January 2, 1998, effective January 3, 1998, 28 Pa.B. 21. Immediately preceding text appears at serial pages (224421) to (224423).
Notes of Decisions Benefit Eligibility
Claimant was not entitled to benefits based upon assertion that claimant retired due to ‘‘impending layoff’’ when claimant did so after attaining maximum pension benefit amount. Boyle v. Unemployment Compensation Board of Review, 566 A.2d 1259 (Pa. Cmwlth. 1989).
Normal Retirement Date
This regulation makes no mention of a normal retirement date determination. Therefore, when the employer makes an offer of full pension rights to an employee to retire, and the employee accepts such an offer, a finding of when the ‘‘normal retirement date’’ occurs is not necessary to the application of the statute or regulation. Dannerth v. Unemployment Compensation Board of Review, 682 A.2d 55 (Pa. Cmwlth. 1996).
Offset of Benefits
Exemption did not apply to unemployment compensation claimants because they were eligible to retire under their employer’s retirement plan at the time the plant closed regardless of the special plant closing retirement plan; in order for the exemption to apply, the claimant must be permanently and involuntarily separated from employment prior to his retirement date. Hornsberger v. Unemployment Compensation Board of Review, 718 A.2d 359 (Pa. Cmwlth. 1998); appeal denied by 758 A.2d 1203 (Pa. 1999).
Unemployment compensation benefits are reduced by the amount of pension moneys paid by an employer to an employe who has elected to retire under an enhanced retirement program. PECO Energy Co. v. Unemployment Compensation Board of Review, 682 A.2d 36 (Pa. Cmwlth. 1996).
The Unemployment Compensation Board properly determined that the employe received a pension of $494 per week and that this pension was entirely contributed to by the employer and because the employe’s weekly pension exceeded the calculated weekly benefit rate of $340, the unemployment benefits were reduced to zero. Kelly v. Unemployment Compensation Board of Review, 682 A.2d 29 (Pa. Cmwlth. 1996).
When the employe accepted the plan which permitted retirement at age 50, that age then became for the employe the age of retirement and the employe was therefore not separated from employment prior to the retirement date. Since the employe was not separated from employment, however voluntarily or involuntarily, ‘‘prior to retirement date,’’ the regulatory exception to the rule of pension offset does not apply. The plain language of the excepting regulation requires that an employe be separated prior to retirement date, and, because the employe was not so separated, pension benefits could be deducted from the unemployment benefits. Dannerth v. Unemployment Compensation Board of Review, 682 A.2d 55 (Pa. Cmwlth. 1996).
Claimant reached the actual retirement date. The age at which claimant may have intended to retire, the offer of an enhancement plan that actually enabled claimant’s earlier retirement without penalty, claimant’s preference for delaying retirement in order to receive a larger pension, as well as other circumstances pertaining to ‘‘normal’’ retirement age, are not part of the relevant inquiry under this regulation. Therefore, claimant’s pension could be deducted from any unemployment compensation which claimant would otherwise be entitled to receive. Salerno, Jr. v. Unemployment Compensation Board of Review, 674 A.2d 776 (Pa. Cmwlth. 1996).
Although Claimant neither intended to retire nor considered self to be retired, at the time of separation claimant was admittedly eligible to retire under employer’s plan and was eligible to receive pension money without penalty. Contrary to claimant’s assertions, claimant’s eligibility to retire was determinative, and the Unemployment Compensation Board correctly applied 43 Pa.C.S. § 804(d)(2) to determine claimant’s weekly benefit rate by reducing the benefit amount from monthly retirement income even though claimant took retirement benefits in a lump sum payment. Rathvon v. Unemployment Compensation Board of Review, 663 A.2d 893 (Pa. Cmwlth. 1995).
This section was not inconsistent with Unemployment Compensation Law (43 P. S. § 804(d)(2)) or Multiemployer Pension Plan Amendments Act of 1980 (26 U.S.C.A. § 3304(a)(15)) even though it did not allow for the offset of retirement benefits against unemployment benefits in certain cases involving liquidation of pension benefits as a result of plant closings. Teledyne Columbia-Summerill Carnegie v. Unemployment Compensation Board of Review, 634 A.2d 665 (Pa. Cmwlth. 1993).
Unemployment compensation claimants who were separated from employment prior to retirement due to a plant closing were entitled to receive unemployment compensation without a deduction for pension benefits because this section was designed to protect a worker from the devastating effects of a plant closing. Westinghouse Electric Corp. v. Unemployment Compensation Board of Review, 549 A.2d 623 (Pa. Cmwlth. 1988); on reargument 561 A.2d 80 (Pa. Cmwlth. 1989).
Retirement benefits paid to an employe separated from employment due to a plant closing before employe reaches retirement age are not deducted from unemployment compensation. Westinghouse v. Unemployment Compensation Board of Review, 561 A.2d 80 (Pa. Cmwlth. 1989).
Separation
Claimant was not permanently and involuntarily separated from employment prior to retirement date, as claimant was eligible to retire at anytime. The fact that the claimant had no plans to retire at the time of separation was irrelevant. Grace v. Unemployment Compensation Board of Review, 631 A.2d 748 (Pa. Cmwlth. 1993).
Separation
Claimants remained on lay-off status after the plant closed and continued to accrue service credit. Because of this ongoing relationship, claimants were not fully, and not necessarily permanently, ‘‘separated’’ from employment; thus, employer was entitled to offset the weekly amount of the pensions against any unemployment benefits to which claimants were entitled. Attenberger v. Unemployment Compensation Board of Review, 682 A.2d 68 (Pa. Cmwlth. 1996).
§ 65.104. Initial payments.
(a) When, following the retirement of an employe and, as part of a general pension plan, an initial payment is made in lieu of or in addition to the regular pension amount to which the employe is entitled, the initial payment will be considered a pension payment, and will be subject to this chapter.
(b) Initial payments are independent of regular pension payments. To the extent that they meet the requirements for deductibility provided in this chapter, the Department will deduct them from compensation otherwise payable to a claimant even if the claimant’s regular pension payments are not deductible. The Department will not deduct initial payments if they do not meet the requirements for deductibility provided in this chapter, even if the claimant’s regular pension payments are deductible.
(c) When the initial payment includes an amount paid for any reason other than pension, including unused vacation, only that amount which is attributable to the pension is deductible.
(d) When the initial pension payment is received by a claimant in a lump-sum, the deduction of this initial pension amount will be calculated by dividing the initial pension amount by the number of weeks for which the pension plan specifies the initial payment is being made. The number of weeks attributable to unused vacation or other payments will not be used in determining the weekly pension amount to be deducted. The result of this calculation, if not a multiple of 1 dollar, will be computed to the next higher multiple of 1 dollar and will be considered the prorated weekly deductible amount of the initial payment and is the amount by which the weekly benefit rate will be reduced, but not below zero.
Source The provisions of this § 65.104 adopted July 1, 1969; amended March 12, 1976, effective March 13, 1976, 6 Pa.B. 450; amended January 2, 1998, effective January 3, 1998, 28 Pa.B. 21. Immediately preceding text appears at serial page (224423).
§ 65.105. Lump-sum retirement payments.
(a) When a claimant receives a lump-sum payment in lieu of a periodic pension payment, the prorated weekly pension amount which the employe could have received will be deducted in accordance with § 65.108 (relating to rules of attribution).
(b) When a claimant cannot receive periodic pension payments and must take a mandatory lump-sum payment, no pension deduction will be made.
(c) When a claimant receives a deductible lump sum payment and transfers only a portion of that payment into an eligible retirement plan within 60 days of receipt, the remainder of the lump sum payment which is not transferred into an eligible retirement plan will be deducted, along with any other deductible pension payments made to the claimant under § 65.102 (relating to application of the deduction) and § 65.108.
Source The provisions of this § 65.105 adopted July 1, 1969; amended March 12, 1976, effective March 13, 1976, 6 Pa.B. 450; amended January 2, 1998, effective January 3, 1998, 28 Pa.B. 21. Immediately preceding text appears at serial page (209615).
§ 65.106. [Reserved].
Source The provisions of this § 65.106 adopted July 1, 1969; reserved March 12, 1976, effective March 13, 1976, 6 Pa.B. 450. Immediately preceding text appears at serial pages (9326) to (9327).
§ 65.107. [Reserved].
Source The provisions of this § 65.107 adopted July 1, 1969; reserved March 12, 1976, effective March 13, 1976, 6 Pa.B. 450. Immediately preceding text appears at serial page (9327).
§ 65.108. Rules of attribution.
If a pension, retirement, annuity or other similar periodic payment deductible under section 404(d)(2) of the law (43 P. S. § 804(d)(2)) is received on other than a weekly basis, the amount to be deducted will be prorated as follows: The claimant’s monthly pension is the amount the claimant could have received each month had the claimant opted to take periodic payments in lieu of a lump sum. The Department will use the deductible amount of that monthly pension, convert it to a yearly amount, and divide by 52. If not a multiple of one dollar, the Department will determine the prorated weekly deductible amount of the pension by rounding to the next higher multiple of one dollar. The weekly benefit amount payable to the claimant will be reduced, but not below zero, by the prorated weekly deductible amount of the pension, in accordance with section 404(d)(2) of the law.
Source The provisions of this § 65.108 adopted January 2, 1998, effective January 3, 1998, 28 Pa.B. 21.
Cross References This section cited in 34 Pa. Code § 65.102 (relating to application of the deduction); and 34 Pa. Code § 65.105 (relating to lump-sum retirement payments).
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