The COVID-19 pandemic has revealed that some businesses intend to maintain a level of force reduction even as the economy returns to a more normal state. Often individuals who have been given modified work post-injury and are then laid off eventually have their Workers Compensation benefits reinstated by agreement, petition, or judicial termination. The result is a population of employees that have received large unemployment compensation benefits during the crisis now returning to the Workers Compensation System.
Under Pennsylvania Unemployment Compensation Law, when an individual’s employment is terminated through no fault of his or her own the individual is entitled to Unemployment Compensation Benefits. Under Act 57 the Pennsylvania Workers Compensation Act the Act was changed so that Workers Compensation Insurance Carriers could take a credit against Unemployment Compensation benefits received (the “Credit”).
This Credit does not apply to specific losses under §306(c) or fatal claim benefits under §307. That said, in cases where it does apply the Credit is strictly applied and the Workers Compensation Judge must apply the Credit against benefits due – even if counsel does not request it.
The method for taking the credits is set forth under Bureau Regulation §123.6 which reads as follows:
(a) Workers' compensation benefits otherwise payable shall be offset by the net amount an employee receives in UC benefits subsequent to the work-related injury. This offset applies only to UC benefits which an employee receives, and which are attributable to the same time period in which an employee also receives workers' compensation benefits.
(b) The offset may not apply to benefits for which an employee may be eligible but is not receiving.
(c) The offset to workers' compensation benefits for amounts received in UC benefits is triggered when an employee becomes eligible for and begins receiving the UC benefits.
(1) When an employee receives UC benefits which the employee is later required to repay based upon a determination of ineligibility, the insurer may not offset the workers' compensation benefits.
(2) When an employee’s workers' compensation benefits have been offset by the amount received in UC benefits, and the employee is required to repay UC benefits based upon a determination of ineligibility, the insurer shall repay the employee for the amounts previously offset from the workers' compensation benefits. The employee may request that the insurer remit repayment directly to the Bureau of Unemployment Compensation Benefits and Allowances (BUCBA).
(d) When an employee receives a lump-sum award from the BUCBA, the insurer may offset the amount received by the employee against future payments of workers' compensation benefits. The amount received by the employee shall be divided by the weekly workers' compensation rate. The result shall be the number of weeks, and fraction thereof, the insurer is entitled to offset against future payments of workers' compensation benefits.
The bottom line is that the Insurance Carrier can take a dollar-for-dollar net credit against Unemployment Benefits received. Procedurally, the employer's Insurance Carrier would want to give the Claimant notice of the offset by sending a Notice of Benefit Offset to the Claimant.
Importantly, the net amount of Unemployment Compensation received is credited. This means that any taxes or other deductions, such as child support payments that come off the top of the total paid, do not count toward the credit in these matters.