Tuesday, June 16, 2015

Is a Retention Bonus the Same as Severance Under Pennsylvania Unemployment Law? What is a Retention Bonus?

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Retention Bonuses Are Offered to Keep You Employed - Severance is Offered On Account of You Leaving Employment

Apparently, the Pennsylvania Department of Labor is taking the position that retention bonuses are the same as severance for unemployment purposes.  This is affecting the rights of hundreds of displaced Pennsylvania workers, who are being denied unemployment benefits.

Here is an internal memo from the Department of Labor addressing this issue.  It reads in pertinent part as follows (ALL CAPS in original):

Retention Bonus is a tricky subject….”Severance pay” means one or more payments made by an employer to an employee ON ACCOUNT OF SEPARATION from service of the employer.  The retention bonus in this case was paid because of the separation and moreover, at the time of the separation and filing for benefits.

Retention Bonus Paid
When You Are Asked to Stay

Retention or "Stay On" Bonuses Are Not Severance Payments

Contrary to what the DOL's internal memo says, retention bonuses are not paid because a business is closing.  They are paid to keep an employee working UNTIL a business closes.

Retention bonuses are paid to encourage people employed by companies that have been sold ("Company Sold") to another company ("Buying Company") to remain in the employ of Company Sold for a period of months, after which they will be laid off when Buying Company assumes control of Company Sold.

Usually, in addition to a retention bonus, the to-be-displaced employees are also paid a severance when the change in control occurs.

Severance Paid
When You Are Told to Leave

If the retention bonus is in excess of roughly $19,417, the Department of Labor is construing the bonus as severance, and denying benefits.

Dead Wrong on This One

This is inconsistent with Pennsylvania law.

If you appeal such a determination by the Department of Labor's Service Center, and prepare properly for the ensuing Referee Hearing, you can win this case (even if you have to subsequently appeal to the Board of Review).

HERE ARE SOME OTHER LINKS YOU MAY FIND WORTHWHILE:

Should I Hire a Lawyer for My Unemployment Appeal Hearing in Pennsylvania?

Unemployment Appeal Hearings by Telephone in Pennsylvania - The New Norm - And Why You Want to Consider Hiring Legal Counsel

Pennsylvania Unemployment Lawyer - Willful Misconduct Referee Hearings

I Want to Quit My Job and Get Unemployment Benefits in Pennsylvania

Pennsylvania Unemployment Determination of Financial Eligibility - PENNSYLVANIA UNEMPLOYMENT LAWYERS

How Do I Complete an Application for Unemployment Compensation Benefits in Pennsylvania - Did I Resign or Was I Fired?  What is a Reduction in Force Versus a Layoff?

 What is a Necessitous and Compelling Reason for Quitting my Job Under Pennsylvania Unemployment Law? Philadelphia Unemployment Lawyers Explain

The Burden of Proof in a Pennsylvania Unemployment Appeal Referee Hearing

I was Fired - What Should I Say on My Internet On Line Application for Pennsylvania Unemployment Benefits?

Voluntary Retirement and Unemployment Compensation in Pennsylvania - Am I Entitled to Benefits if I Retire From My Job?


This promises to be a contentious legal issue, as the Department of Labor has been, and remains, dead serious about maximizing the applicability of the 2012 severance amendment in order to preserve unemployment fund assets.  Since it it involves a somewhat tricky legal analysis, and will likely lead to appeals, you may want to consider counsel for your Referee Hearing is this situation arises in your life.


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