Opinion
No. 1715 C.D. 2014
07-06-2015
Department of the Army Depot, Tobyhanna Army Depot, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE COVEY
Department of the Army Depot, Tobyhanna Army Depot (Employer) petitions this Court for review of the Unemployment Compensation (UC) Board of Review's (UCBR) August 29, 2014 order reversing the Referee's decision and granting Patrick J. McGinnis (Claimant) UC benefits under Section 402(b) of the UC Law (Law). Employer presents three issues for this Court's review: (1) whether the UCBR committed an error of law in finding Claimant entitled to UC benefits pursuant to the voluntary layoff option (VLO) under Section 402(b) of the Law; (2) whether the UCBR's finding that Employer had an established plan, program or policy for workforce reduction is supported by substantial evidence; and (3) whether Claimant had a necessitous and compelling reason to leave his employment. After review, we affirm.
Act of December 5, 1936, Second Ex.Sess., P.L. (1937) 2897, as amended, 43 P.S. § 802(b) (referring to voluntarily leaving work without cause of a necessitous and compelling nature).
Employer employed Claimant from December 13, 1984, through June 30, 2013 as a full-time third shift sheet metal mechanic work leader. Employer had a Voluntary Early Retirement Authority (VERA) for those ineligible for retirement and a Voluntary Separation Incentive Pay (VSIP) that offered $25,000.00 to eligible employees to retire early. For the past several years, Employer was restructuring its workload, including several rounds of VERA and VSIP to encourage retirement and resignation. After each round of VERA and VSIP, the workload structure was reevaluated to determine whether another round of VERA and VSIP should be offered. Employer did not intend to involuntarily lay off employees who did not accept the VERA or VSIP. Claimant was eligible to retire and, on June 11, 2013, accepted the VERA/VSIP, resigning effective June 30, 2013.
Claimant applied for UC benefits. On March 12, 2014, the Scranton UC Service Center issued a determination finding Claimant eligible for UC benefits under Section 402(b) of the Law. Employer appealed and on April 10, 2014, a Referee hearing was held. The Referee reversed the UC Service Center's determination. Claimant appealed to the UCBR. On August 29, 2014, the UCBR reversed the Referee's decision and found Claimant eligible for UC benefits under Section 402(b) of the Law. Employer appealed to this Court.
This Court's scope of review is limited to determining whether an error of law was committed, constitutional rights were violated, or necessary findings of fact are supported by substantial evidence. In unemployment compensation cases, the [UCBR] is the ultimate finder of
fact. If a petitioner fails to challenge the [UCBR's] factual findings, they are conclusive on appeal. Moreover, we must examine the evidence in the light most favorable to the party who prevailed before the [UCBR].Gibson v. Unemployment Comp. Bd. of Review, 760 A.2d 492, 494 (Pa. Cmwlth. 2000) (citations omitted).
Employer first argues that the UCBR committed an error of law in concluding that Claimant was entitled to UC benefits under the VLO of Section 402(b) of the Law. It asserts that the UCBR improperly expanded the holding in Diehl v. Unemployment Compensation Board of Review, 57 A.3d 1209 (Pa. 2012), because Employer's use of VERA was not an early retirement plan offered pursuant to an employer-initiated workforce reduction.
The VLO under Section 402(b) of the Law provides that an employee shall be ineligible for UC benefits for any week
[i]n which his unemployment is due to voluntarily leaving work without cause of a necessitous and compelling nature, irrespective of whether or not such work is in 'employment' as defined in this act: . . . Provided further, [t]hat 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). Our Supreme Court in Diehl expressly held: "the VLO Proviso of Section 402(b) of the [Law], . . . applies to an 'otherwise eligible claimant' who accepts an early retirement plan offered pursuant to an employer-initiated workforce reduction." Diehl, 57 A.3d at 1222 (emphasis added). Employer asserts that the VERA in the instant case was not part of an employer initiated workforce reduction, thus Diehl does not apply. We disagree.
In Diehl, the sixty-three year old employee was a twenty-three year employee of the employer, where he worked as a shipping clerk. The employer announced a reduction in its workforce due to financial conditions and issued a memo to the employees' union with a list of twenty employees who would be laid-off in accordance with the union contract's Reduction-in-Workforce section. While the list did not include the employee who had high seniority, the memo explained that up to ten listed employees would be retained to fill vacancies pending the results of the early retirement offer. The employer offered employees over sixty years old an early retirement program to encourage high seniority employees to leave so that the less senior employees on the list would not be laid off. The offer included full payment of health insurance for three years and partial payment for two years. Additionally, the employer would pay for unused vacation days, but not a severance benefit or other monetary compensation. The employee accepted the early retirement package, under the assumption that he would also receive unemployment compensation.
The Diehl Court considered the fact that the employer initiated and announced a workforce reduction in accordance with its union contract. The workforce reduction named twenty employees who would be discharged on a certain date, with a sub-list of ten individuals who would be retained to fill vacancies pending the results of the early retirement offer. If an employee did not accept the early retirement offer, another less-senior employee would be laid off and would be eligible for unemployment compensation. Thus, the Court concluded that there was no language in the VLO proviso which prevented the interpretation of the term layoff to include this employer-initiated, early retirement package which was offered pursuant to a workforce reduction.
In the present case, the UCBR determined that "[E]mployer's established VERA, which incentivizes early retirements, is an 'established employer plan, program or policy,' so [C]laimant is eligible for benefits under the VLO Proviso of Section 402(b) of the Law." UCBR Dec. at 2; Reproduced Record (R.R.) at 83a. The UCBR concluded:
The combined use of VERA and VSIP, especially in several rounds until workload goals were met, indicates that this was more than just a retirement package, but rather a concerted effort to reduce the employer's workforce by incentivizing retirement and resignation. Therefore, even if involuntary layoffs were not threatened or planned, [E]mployer's VERA was 'an early retirement plan offered pursuant to an employer-initiated workforce reduction' and benefits may not be denied under the VLO Proviso as applied in Diehl.UCBR Dec. at 2-3; R.R. at 83a-84a. We discern no error in the UCBR's reasoning. Accordingly, we hold that the UCBR did not improperly expand the holding in Diehl because Employer's use of VERA was an early retirement plan offered pursuant to an employer-initiated workforce reduction.
Employer next argues that the UCBR's finding that Employer had an established plan, program or policy for workforce reduction is unsupported by substantial evidence. This Court has consistently held:
Substantial evidence is relevant evidence upon which a reasonable mind could base a conclusion. In deciding whether there is substantial evidence to support the [UCBR's] findings, this Court must examine the testimony in the light most favorable to the prevailing party, in this case, the [e]mployer, giving that party the
benefit of any inferences which can logically and reasonably be drawn from the evidence.Sanders v. Unemployment Comp. Bd. of Review, 739 A.2d 616, 618 (Pa. Cmwlth. 1999).
Employer's HR Specialist Bruce Morano (Morano) testified at the Referee hearing regarding Employer's VERA and VSIP as follows:
E[mployer's] L[awyer] And can you tell us about the VERA/VSIP program? What is the program?R.R. at 61a-62a (emphasis added). Morano further testified about the third shift on which Claimant worked:
E[mployer's] W[itness] VERA stands for Voluntary Early Retirement Authority. VSIP stands for Voluntary Separation Incentive Pay. VERA is for early -- for people who are not eligible to retire. In [Claimant's] case, he was actually eligible to retire, so VERA was not an issue for him. However, the incentive pay was $25,000 to voluntarily retire. VERA/VSIP is used - [Employer] has been in -- their [sic] workload has been in a state of flux the last several years and we have never had --- I've been at [Employer] for 30 years and we've never had a reduction in force and there was none planned in this case.
They [sic] were doing a restructuring for the last several years, which included several rounds of VERA/VSIP to encourage people to resign or retire with an incentive. After each VERA/VSIP, the workload structure is reevaluated [to] determine whether or not there should be another round. Or we've had three or four I think we're on our fourth one right now and no one was ever designated to be separated. There was no reduction in force. There was no involuntary separation. It was strictly voluntary.
With regards to the third shift, [Claimant's Supervisor Mike Romancheck] indicated that there was -- that the workload on the third shift was diminishing as well and they did inform people that there was a possibility that the third shift would be going away. There was no definite - there's no definite decision on that, but they did notify people that, the third shift may go away. That never occurred. They maintained enough workload on the shift to keep everybody on third shift. However, when -- if somebody left third shift, they did not fill the position after they left.R.R. at 62a (emphasis added).
This Court had similar facts before it in Naval Surface Warfare Center Carderock Division v. Unemployment Compensation Board of Review, 106 A.3d 256 (Pa. Cmwlth. 2014) (Hilferty). In determining whether Diehl applied, this Court explained:
Employer maintains that Hilferty improperly extended Diehl; however, it is a published opinion of this Court, and thus controlling.
In the instant matter, the evidence demonstrated that the offer of early retirement was initiated at the will of [the e]mployer and accepted by [the c]laimant, that [the c]laimant accepted the offer from an available position, and that the early retirement offer was made pursuant to a plan established by [the e]mployer. This evidence, along with the evidence that [the c]laimant was 'otherwise eligible,' created a presumption that [the c]laimant was eligible for unemployment compensation under the VLO Provision. The burden then shifted to [the e]mployer to demonstrate that the early retirement offer was not a 'layoff.' [The e]mployer failed to carry this burden.
The evidence in the record, the majority of which consists of the testimony of [the e]mployer's witnesses, clearly supports the [UCBR's] determination that the practical effect of [the e]mployer's plan was a layoff of
[the c]laimant. [The e]mployer's witness. . . testified that under the VERA plan, employees in various positions 'were identified as the starting point for a restructuring effort within [the employer's] organization,' as 'surplus or positions that were no longer needed in the workforce.' One of the employees identified was [the c]laimant. Over the course of [the c]laimant's tenure, [the e]mployer had evolved to a strictly engineering employer. [The c]laimant was not an engineer, but [the c]laimant had evolved with the organization and was still considered a valued employee; his skills were not obsolete. However, being a senior statistician, rather than an engineer, [the c]laimant was identified as a target for an early retirement offer. Under the VERA, if an employee accepted the early retirement offer and the duties performed by that employee were still needed, other positions were 'reshaped,' meaning that the remaining duties were transferred to different positions or a new person was hired, such as a trainee, to take over those duties. This is what happened with [the c]laimant's duties: an engineer was assigned to take over [the c]laimant's duties, and a trainee was hired to fulfill duties previously assigned to that engineer. A similar one to one replacement of personnel did not take place with each position that was abolished as a result of an employee's acceptance of the early retirement package. . . . The evidence demonstrates that [the c]laimant's separation was voluntary and that the separation was from an available position. The fact that [the c]laimant's early retirement wasn't forced and that he could have remained in his position brings [the c]laimant within the VLO Provision; it does not exclude him.
In addition to the VERA, [the c]laimant was offered a voluntary separation incentive package or what is called a VSIP. Under [the e]mployer's plan, a VSIP can be offered to employees in order to avoid a RIF [reduction in force] and it can be offered to help [the e]mployer reach restructuring or downsizing goals. The evidence showed that [the e]mployer was using the VERA and VSIP in order to redistribute work, skills, and expertise, as well as to create uniformity in the
professional background of its personnel and to cut costs. The evidence demonstrates that [the e]mployer offered the VERA and VSIP in order to eliminate positions, redistribute employment duties, and replace high-seniority employees with less expensive employees; the early retirement package offered to [the c]laimant was a 'layoff.'Hilferty, 106 A.3d at 261-262 (citations omitted; emphasis added).
Here, Claimant was also offered a VERA/VSIP. The record evidence established that Employer was using the VERA/VSIP to help Employer restructure the workload. Claimant testified that on or about June 6, 2014, he received a telephone call from his supervisor advising him that he qualified for the VERA/VSIP, but that he had to sign the paperwork that day or he would no longer be eligible. See R.R. at 41a-42a. This testimony is contrary to Employer's contention that Employer "made an early retirement program available to its entire workforce, and [Claimant] elected to apply for and accept that offer. His retirement was at no one's will other than his own." Employer Br. at 30-31 (emphasis added). The fact that Claimant was singled out, that Employer communicated the possible elimination of the third shift and the limited time within which Claimant had to accept the offer, Employer's contention cannot stand. Indeed, Claimant was pressured to either take the VERA/VSIP or risk losing his third shift position.
Employer asserts that "workload restructuring" is not the same as "workforce reduction." However, Employer overlooks that Morano testified, and the UCBR found as a fact, that the VERA/VSIP was being offered to encourage retirement and resignation; in other words, reduction of the workforce. See UCBR Finding of Fact 3; R.R. at 62a.
Thus, in accordance with the holding in Hilferty, we are constrained to conclude that the VERA/VSIP offered to Claimant was a layoff within the VLO under Section 402(b) of the Law. Consequently, we hold that the UCBR's finding that Employer had an established plan, program or policy for workforce reduction is supported by substantial evidence.
Because we hold that the VLO under Section 402(b) of the Law applies, we need not address Employer's remaining issue. --------
For all of the above reasons, the UCBR's order is affirmed.
/s/_________
ANNE E. COVEY, Judge
ORDER
AND NOW, this 6th day of July, 2015, the Unemployment Compensation Board of Review's August 29, 2014 order is affirmed.
/s/_________
ANNE E. COVEY, Judge