PA Workers’ Comp Settlement May Preclude Unemployment Compensation

When we settled a workers’ comp case in Pennsylvania (usually done by what is called a “Compromise & Release Agreement”), there was often a question from our client about whether he or she could then file for unemployment compensation benefits. Usually, as part of a workers’ compensation settlement, the employer/insurance carrier wants a resignation as part of the deal. Until recently, we told them the honest answer – maybe. It depended on the identity of the Unemployment Compensation Referee (UCR), the wording of the resignation and the status of the medical clearance (one must be capable of some type of employment to be eligible for unemployment compensation).

When the Commonwealth Court of Pennsylvania recently decided Lee v. Unemployment Compensation Board of Review, however, we were given a pretty specific answer – no, you cannot. Here, the injured worker gave both a resignation and a release (waiving her rights to other causes of action, including unemployment compensation benefits) as part of her workers’ compensation settlement. Following the approval of the settlement, the injured worker filed for unemployment compensation benefits.

Benefits were granted by the UCR, who found the resignation was not “voluntary,” since it was required as part of a workers’ compensation settlement. The Unemployment Compensation Board of Review reversed, finding the injured worker not eligible for unemployment compensation benefits. Upon further appeal, this was affirmed by the Commonwealth Court of Pennsylvania.

While the Court found the release to be void (one cannot waive rights to unemployment compensation benefits in Pennsylvania, or, for that matter, PA workers’ comp benefits), the Court went on to agree with the Board of Review, that the resignation was “voluntary,” meaning the injured worker not was eligible for unemployment compensation benefits.

Settlements of workers’ compensation cases in PA are still routinely performed, and are often the best course of action (depending on the circumstances in each individual case), but this decision means there is another consideration to be taken into account when an injured worker is evaluating whether to settle his or her case.