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Seventeen former Verizon employees who opted for buyout packages are not entitled to unemployment benefits, a Commonwealth Court panel in Pennsylvania has ruled in a 2-1 decision. In the consolidated appeals captioned Johnson v. Unemployment Compensation Board of Review, the majority affirmed the board’s conclusion that the claimants were ineligible because they had left their jobs voluntarily “without cause of a necessitous and compelling nature,” a precondition for benefits under Pennsylvania’s unemployment compensation law. The majority did hold that the case of one Johnson claimant, Melody Mahoner, should be remanded for further proceedings, as Mahoner had testified her fear of losing her job was based on the fact she had not been assigned any work to perform in the period leading up to her acceptance of the buyout. The claimants in Johnson — many of whom had been employed with Verizon for 30 years or more — all testified at their referee hearings that they sensed their jobs would be in jeopardy if they did not accept buyouts. In support of its decision the majority cited the Commonwealth Court’s 2003 opinion in Renda v. UCBR, which also involved Verizon. In Renda, a 5-2 en banc panel held that 63 former Verizon workers with an average of over 30 years on the job were not entitled to unemployment benefits after taking buyouts, despite the fact they felt they had no other choice than to accept the company’s offer. “In Renda, the claimants testified they accepted an enhanced income security plan (EISP) offer because of fears for their job security due to increased reliance on technology, lack of new hires, reductions in overtime, reductions in number of employees and transfer of work duties,” Judge Robert Simpson wrote in Johnson. “They further testified to rumors employer planned to close some offices. We determined these factors were not enough to meet the claimants’ burden, particularly where employer did not inform any of the claimants they would be laid off and where continuing work was available to claimants.” Simpson was joined by Senior Judge Joseph F. McCloskey. Judge Rochelle S. Friedman filed a dissenting opinion. According to Simpson’s opinion, §402(b) of Pennsylvania’s Unemployment Compensation Law states that an employee shall not be entitled to benefits under the law if “his unemployment is due to voluntarily leaving work without cause of a necessitous and compelling nature.” In a footnote, Simpson wrote that management employee buyouts at issue in Johnson included a lump-sum payment of two weeks’ pay times years of service, an additional lump-sum of between $15,000 and $30,000, medical and life insurance benefits for one year and financial planning assistance. Non-management employees were offered packages that included a lump-sum of $2,200 times each year of service (up to $66,000), a voluntary termination bonus of $10,000 and six months of continued medical coverage. Before addressing the individual claims, Simpson noted that when it comes to claims for benefits under §402(b), the employer has no burden of proof. “Testimony by a claimant or an employer that continuing work was not available may amount to necessitous and compelling cause; however, it is not an employer’s burden to come forth with evidence that continuing work was available,” Simpson wrote, adding later, “If an employer chooses not to put forth evidence regarding continuing work, a claimant is not automatically granted benefits, because the burden remains on the claimant to demonstrate necessitous and compelling cause.” During their referee hearings, all of the claimants in Johnson painted a picture of job uncertainty in the time immediately preceding their acceptance of the buy-out packages, but none testified that he or she was specifically informed by Verizon that his or her job would be eliminated if the package offered was not accepted. Renda was cited repeatedly. Mahoner, however, will receive a new credibility hearing because of testimony she offered that indicated there was a strong possibility she would lose her job. Explaining that her software engineering duties were outsourced to India in 2002, Mahoner told the referee, “I knew that I was one of those people slated for reduction in force, because I didn’t have [any] work to do,” according to Simpson’s opinion. In her dissent, Friedman argued that the Commonwealth Court’s 2003 decision in McCarthy v. UCBR supports the entitlement to benefits of claimants like those in Johnson. “Using the legal test in McCarthy,” she wrote, “an offer of incentives to terminate employment, combined with silence about the effect of a refusal, would produce real and substantial pressure on an employee to terminate employment and would compel a reasonable person to act in the same manner. Therefore, under those circumstances, the employee would have cause of a necessitous and compelling nature for terminating employment and would be entitled to benefits.” Friedman had filed the dissenting opinion in Renda, in which Simpson wrote on behalf of the majority. Andrew McAneney is a Northeast Philadelphia solo practitioner who represented three of the claimants in Johnson. “This decision basically forces employees to make the Hobson’s choice of either refusing the program, keeping their jobs and getting laid off in a week, or taking the money and not being entitled to benefits which they had been entitled to under prior law,” McAneney said. He said he has not yet discussed appellate options with his clients. Department of Labor and Industry spokeswoman Shannon Powers would not comment on the majority’s holding, as it may be appealed.

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