filed : October 27, 1988.
WESTINGHOUSE ELECTRIC CORPORATION, PETITIONER
COMMONWEALTH OF PENNSYLVANIA, UNEMPLOYMENT COMPENSATION BOARD OF REVIEW, RESPONDENT; WESTINGHOUSE ELECTRIC CORPORATION, PETITIONER V. COMMONWEALTH OF PENNSYLVANIA, UNEMPLOYMENT COMPENSATION BOARD OF REVIEW, RESPONDENT
Appeal from PETITION FOR REVIEW
2697 C. D. 1987: James C. Brennan, Esq., Cynthia A. McNicholas, Esq., RANKIN, BRENNAN & DONALDSON, Media, Pa., Attorneys for Petitioner.
Clifford F. Blaze, DEP. CH. COUNSEL, James K. Bradley, ASST. COUNSEL, Gary L. Kelley, ASST. COUNSEL, Harrisburg, Pa., Attorneys for Respondent.
1398 C. D. 1988: Cynthia A. McNicholas, Esq., RANKIN, BRENNAN & DONALDSON, Media, Pa.
Clifford F. Blaze, DEP. CH. COUNSEL, James K. Bradley, ASST. COUNSEL, Gary L. Kelley, ASST. COUNSEL, Harrisburg, Pa.
Before: Honorable David W. Craig, Judge, Honorable Francis A. Barry, Judge, Honorable Bernard L. McGINLEY, Judge. Judge MacPhail did not participate in the decision in this case.
Opinion BY HONORABLE FRANCIS A. BARRY, Judge
Westinghouse Electric Corporation (the employer) appeals an order of the Unemployment Compensation Board of Review which granted benefits to Tibor Pavlanszky and John Kalalian under Section 404(d)(iii) of the Unemployment Compensation Law (Law)*fn1
Claimant Pavlanskzy applied for benefits with the Office of Employment Security (OES) after the employer closed one of its plants. OES determined that the claimant was eligible to receive weekly benefits in the amount of $242.00. However, OES reduced this weekly amount by $140.00 as it determined that the claimant was receiving retirement benefits. The referee affirmed OES concluding that Section 404(d)(iii) of the Law mandated that pension payments should be deducted, dollar for dollar, from the benefits amount. The Board remanded to the referee to act as its hearing officer and to obtain:
1. A copy of Westinghouse Electric Company retirement pension plan.
2. Testimony as to what age and seniority must an employee be to obtain a retirement pension.
3. Testimony as to whether claimant, on the date of his separation from employment with Westinghouse Electric Company at his age and seniority, could, on his own, i.e., without being permanently separated by Westinghouse, request retirement and receive a retirement pension in any amount.
After the Board reviewed this evidence it found:
2. On November 30, 1986, the employer's plant closed.
3. The claimant was placed on furlough status from his last day of work through January 9, 1986 and was officially laid off and permanently separated.
4. As of February 1, 1987, the Claimant became eligible for a pension pursuant to the plant closing Section of the existing contract, and began receiving same in the amount of 602.48, which computes to 140.00 per week.
5. Claimant, at the time of his separation, was fifty (50) years of age and had twenty-two (22) years of seniority with the employer.
6. The earliest claimant could have applied for a pension, without being permanently separated due to plant closing was when he became fifty-eight (58) years of age and had thirty (30) years of service.
7. Claimant, at the time of his separation and at the time he was retired, did not have the right to apply for and receive a pension.
Based on these factual findings the board concluded that the claimant was eligible to receive unemployment compensation without a $140.00 weekly deduction for being the recipient of a pension. The Board opined that when a employee is permanently separated from his job due to a plant closing he is entitled to full benefits without a pension reduction pursuant to 34 Pa. Code § 65.103.
Claimant Kalalian was permanently separated from his employment due to the employer's closing of one of its plants. He filed for benefits with OES. OES determined that the claimant was eligible to receive $241.00 per week, but this amount should be reduced because the claimant was the recipient of a lump sum pension payment. The referee affirmed this decision. The Board reversed. This Court remanded, based on the parties stipulation, to the Board. The Board vacated its first decision and substituted the following factual determinations:
2. On March 31, 1987, the claimant was permanently involuntarily separated from his employment because the employer's plant was closed.
3. At the time of his separation, the claimant was 52 years old and had 31 years of service with this employer.
4. At the time of his involuntary separation, the claimant was given the option of (1) receiving a lump sum pension, or (2) receiving a monthly pension, or (3) receiving his pension benefits in this employee related account until age 60.
5. The claimant chose to withdraw a lump sum pension of 182,000.00 rather then a monthly pension of 1,429.00, which would be the equivalent of 330.00 per week.
6. Claimant's weekly benefits rate is 241.00
7. The earliest claimant could have applied for a pension without being permanently separated due to a plant closing was when he became 58 years old and had 30 years of service.
8. The claimant could not qualify for retirement at this time unless there was first a plant location close down to trigger the retirement mechanism under which the claimant retired.
Again, the Board concluded that 34 Pa. Code § 65.103 precluded a pension deduction from unemployment benefits if the employee was separated from his employment because of a plant closing.
In both cases the employer appealed the decision of the Board. These cases were consolidated, as both concern an identical issue. The employer argues that the Board erred as a matter of law by concluding that the claimant's pension payments should not be deducted, dollar for dollar, from the weekly amount of unemployment compensation benefits. It contends that the 1980 amendment to Section 404(d)(iii) invalidates 34 Pa. Code § 65.103.
Section 404 (d)(iii) of the Law states:
[E]ach eligible employee who is unemployed with respect to any week ending subsequent to the first day of July, one thousand nine hundred eighty, shall be paid, with respect to such week, compensation in an amount equal to his weekly benefit rate less the total of . . . (iii) an amount equal to the amount of a governmental or other pension, retirement or retired pay, annuity, or any other similar periodic payment which is based on the previous work of such individual, which is reasonably attributable to such week . . . The provisions of this subsection shall be applicable whether or not such vacation pay retirement pension or annuities, or wages are legally required to be paid. If such retirement pension or annuity payments deductible under the provisions of this subsection are received on other than a weekly basis, the amount thereof shall be allocated and prorated in accordance with the rules and regulations of the department.
43 P.S. § 804(d)(iii). The 1980 amendment to Section 404(d)(iii) substantially changed this provision. Prior to this amendment, this section, in pertinent part, stated:
Notwithstanding any other provisions of this section each eligible employee who is unemployed with respect to any week ending subsequent to the first day of July, one thousand nine hundred seventy-four, shall be paid, with respect to such week, compensation in an amount equal to his weekly benefit rate less the total of . . . (iii) that part of a retirement pension or annuity, if any, received by him under a pension plan to which a base-year employer of such employee has contributed which is in excess of forty dollars ($40.00) per week. Retirement pension or annuity payments received by the employe under the Federal OASI program, the Federal Railroad Retirement program or under any retirement plan to which the employe was the sole contributor shall not be considered a deducible retirement pension or annuity payment for the purpose of this subsection.
Obviously, the 1980 amendment effected a significant change in Section 404(d)(iii). This Court has determined that the general language of the 1980 amendment was meant, by the General Assembly, to be inclusive. Tenaglia V. Unemployment Compensation Board of Review. 73 Pa. Commonwealth Ct. 453, 458 A.2d 331 (1983). This Court has also determined that the pension offset provision of Section 404 (d) (iii) applies to various forms of employee benefits. See Mahland v. Unemployment Compensation Board of Review, 83 Pa. Commonwealth Ct. 301, 476 A.2d 1023 (1984); Sanders v. Unemployment Compensation Board of Review, 86 Pa. Commonwealth Ct. 1, 482 A.2d 1371 (1984); Tenaglia; Czuba v. Unemployment Compensation Board of Review, 55 Pa. Commonwealth Ct. 231, 422 A.2d 1235 (1980); Novak v. Unemployment Compensation Board of Review, 73 Pa. Commonwealth Ct. 148, 457 A.2d 610 (1983). It is crucial to note that these cases do not deal with the current scenario -- a claimant being separated from his employment and receiving his pension contribution because of a plant closing. This fact is essential to the resolution of this matter because of 34 Pa. Code § 65.103. This regulation states:
65.103. Separation prior to retirement date.
(a) when an employee has accumulated certain moneys, rights or equities under a retirement pension or annuity plan but is permanently and involuntarily separated from his employment prior to retirement date, and payment is made to him from such moneys or in liquidation of his rights or equities, that payment shall not constitute a retirement pension or annuity within the meaning of section 404 (d) (4) (iii) of the law (43 P.S. § 804(d)(4)(iii) nor shall it be considered a deductible wage replacement under any other provision of the law.
(b) Subsection (a) of this section shall apply whether the payment is made in a lump sum or in installments.
(c) For the purposes of this section, the phrase "prior to retirement date" shall mean prior to the claimant's attainment of the age specified in the retirement plan or program at which the employee may be retired with full or reduced pension rights.
34 Pa. Code § 65.103. The employer's argument that the 1980 amendment to Section 404(d)(iii) has revoked this regulation fails for several reasons. First, the regulation has not been changed during the interim years since the amendment indicating that the Board has been invoking it. Second, the 1980 amendment did not purport to limit the Board's ability to promulgate rules and regulations concerning deduction from an award of benefits for the receipt of a particular pension. In this case, the Board had recognized that a claimant should be awarded benefits without a deduction when that claimant is not entitled to a pension. It must be remembered that this regulation will protect the individual who has accrued a few hundred dollars in a contributory pension fund and who is permanently separated from his/her employment due to a plant closing. The Unemployment Compensation Law is remedial in nature. It was designed to maintain a worker's basic needs while he/she attempts to find a new employment situation. 34 Pa. Code § 65.103 is designed to protect a worker from the devastating effects of a permanent plant closing. These workers should not be punished for preparing for the future when all existing plans for the future come to a dramatic and permanent end. Third, the regulation exists. It was in effect before the 1980 amendment (since 1976). It was not specifically addressed by the legislature at that time, nor has the Board sought to change the effect of the regulation even though it had the power to do so. We are required to give wide deference to an administrative agency's promulgated rules and regulations. We note that the Board's treatment of employee benefits in this area remains imprecise. Accordingly some employees are able to collect full unemployment compensation benefits while receiving a employee benefit pursuant to a contractual agreement with an employer. Furloughed employees are able to receive benefits while collecting sub-pay or while receiving medical insurance payments. In this appeal we are requested to bring uniformity and clarity to this area. We cannot do so in this matter as the proper method for alteration of this regulation, and for resolution of the Board's treatment of all employee benefits, is with the legislature.
NOW, October 27, 1988, the orders of the Workmen's Compensation Board of Review, Board, at No. B-261989 and No. B-259426-B, are hereby affirmed.