Thursday, July 30, 2015

Overpayments Under Pennsylvania Unemployment Law - Fraud, Non-Fraud, At Fault, Non-At Fault

I have a Fraud or At Fault Overpayment Notice From the Pennsylvania Unemployment Department of Labor

There are 2 types of overpayments that one can be charged with under Pennsylvania Unemployment Law.  The first, and most troublesome, is denoted a "fraud" or "at fault" overpayment.  We will discuss the most common scenario for such a finding in this Post.

It Will Investigate Why You Are No Longer Employed Every Time

What to Say When You Apply for Pennsylvania Unemployment Benefits - Do Not Say You Lost Your Job Due to a Lay Off or Reduction in Force if You Were Terminated from Your Job

Generally, the most common situation that results in a "fraud" or "at fault" overpayment occurs when a person applying for benefits states that the reason they are no longer employed is because of  lay-off, lack of work or reduction in force when in fact he/she was terminated.

If You Were Fired, Say So -
No Matter What You Believe Was the "Real Reason" Your Employment Ended
It is very simple, if you are applying for benefits because your employer decided to end your employment you must honestly state on your application what the employer told you was the reason that you were being let go.

The choices are almost always 1) termination; 2) lay-off; 3) reduction in force ("RIF"); or, 4) lack of work.

Completing an Application for Pennsylvania Unemployment Compensation - What is a Lay Off? What is a Reduction in Force? What is a Termination? What Does Lack of Work Mean?

The general rule is that RIFs usually involve a group of people all being permanently separated from employment at the same time.  If you were the only one let go, you were probably not part of a reduction in force.

Usually, employees who are laid-off (a frequent occurrence for union or seasonal workers) are told at the time of lay-off that they are "eligible for rehire" or will be recalled when business picks up. Lay-offs are typically temporary separations due to a downturn in business.

Being let go for lack of work is often like a small scale RIF.  The separation is permanent, and has nothing to do with the employee's performance.

NOTE 1:  The above principles almost always apply to larger companies.  However, with smaller companies (i.e. 10 or so employees or less), employees are sometimes let go due to a financial downturn, merging of job responsibilities or concern over the long-term viability of the company.  

This type of small scale "restructuring can result in only one employee being RIFfed, laid-off or due to lack of work.

NOTE 2:  Employees who are let go due to a RIF, lack of work or lay-off are deemed to have been let go through no fault of their own, and are thus entitled to unemployment benefits in all cases.  If, on the other hand, one is terminated for "willful misconduct," no benefits will be paid.

If You Were Told You Were Being Let Go Due to Your Performance o Something You Allegedly Did Wrong, You Were Told You Were Terminated 

If the company provides a reason for the separation that relates to the your actions/inactions, or to your alleged qualifications/performance (or perceived lack thereof), you were fired.

I know it hurts to say you were fired, but, it is what it is.

If You Say You Lost Your Job Due to Lay-Off, Lack of Work or Reduction in Force When in Fact You Were Fired, You Will Very Likely be Denied Benefits and Charged With a Fraud or At Fault Overpayment

Pennsylvania's application for unemployment compensation requires applicants to state the reason they were told their employment was ending.  Hence, that is what you must do (as opposed to putting down what you believe to be "the real reason" you were let go).

The most common reason that someone is charged with a fraud or at fault overpayment is because they said on their application that they lost their job due to a lay-off, lack of work or a reduction in force when in fact they were terminated.


When an applicant for Pennsylvania unemployment claimant loses a job through no possible fault of their own (i.e. part of a RIF, for lack of work or due to lay-off), the applicant is eligible for benefits and will begin to be paid benefits immediately.

However, immediately after the application is processed (i.e. at the same time the first check for benefits is being paid to the applicant) the Pennsylvania Service Center then writes the employer to ask it why the claimant is no longer employed.

Fraud or At Fault Overpayments -
Not a Good Thing
If the employer writes back and says the claimant was fired due to X (willful misconduct), the DOL most often: 1) brands the claimant a liar (based on a false application); 2) denies the claim (finding that the claimant engaged in willful misconduct no matter what because he/she lied on the application) and issues a fraud overpayment finding, seeking all paid benefits back with penalties (because the benefits were paid were made due to the lie on the application).

You Can Still Win Benefits, and Remove the Overpayment Finding, if You Prove at a Pennsylvania Unemployment Referee Hearing That You Were Not Fired for Willful Misconduct

If The Employer Cannot Prove You Engaged in "Willful Misconduct" -
You Become Eligible for Benefits Again and the Overpayment Evaporates
If you are involved in the above scenario, all is not necessarily lost.  That is so because there is no separate penalty for making a "false" statement on your application for benefits.

That means that is you win at the Referee Hearing  (i.e. defeat the employer's claim that you engaged in willful misconduct), you will not only start getting benefits again, but the overpayment finding is wiped out as well.

NOTE 3:  I have found that many employees disbelieve the reasons told to them for why they were being let go, instead choosing to believe that there was some other reason (i.e. they were being let go as a cost-cutting move, due to lack of work, etc.) for the termination.  Thus, when they apply for benefits, they list what they believe to be "the real reason" for their termination (i.e. lack of work or lay-off).

For reasons explained above, this is not a sound idea.  List the reason that the employer told you for your separation of employment on the application.  This will not only increase your chances of winning the initial determination, but will help you avoid an at fault or fraud overpayment determination.   

Click Here to see the Department of Labor's explanation concerning overpayments.

Helping Pennsylvania Employees Since 1991
Philadelphia Area Employment Attorney Representing Employees

John A. Gallagher is an employment lawyer who represents employees in Pennsylvania. 

John typically represents workers who need an employment lawyer in Philadelphia County, Chester County, Delaware County, Bucks County, Berks County, Lancaster County and Montgomery County.

Pennsylvania Employment Attorney Provides Free Telephone Consultations

If you are looking for an employment lawyer, and live in Malvern, Paoli, Wayne, King of Prussia, Downingtown, Glenside, Doylestown, Radnor, Newtown Square, Exton, Philadelphia, West Chester, Lansdale, Pottstown, Haverford, Nether Providence, Broomall, Drexel Hill, Reading or any of their surrounding towns, feel free to send me an e-mail or give me a call.  I am always glad to spend some time with people via a free telephone consultation.

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Click Here if you have questions about any aspect of employment law, from wrongful termination, to wage and overtime claims, to discrimination and retaliation laws, to Family and Medical Leave

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