ALLEGHENY VALLEY SCHOOL, Appellant, v. PENNSYLVANIA UNEMPLOYMENT COMPENSATION BOARD OF REVIEW, Darrell Callwood, Intervenor, Appellees.
Supreme Court of Pennsylvania.
June 18, 1997
697 A.2d 243
Argued Sept. 16, 1996.
For the foregoing reasons, the order of the Commonwealth Court quashing in part and denying in part Appellants’ Petition for Review is hereby affirmed.
Sarah C. Yerger, Harrisburg, for Unemployment Compensation Board of Review.
Darrell Callwood, Intervenor.
Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE and NIGRO, JJ.
OPINION OF THE COURT
CASTILLE, Justice.
The issue on appeal in this matter is what factor or factors must be considered when determining whether an unemployment compensation claimant had necessitous and compelling reasons to voluntarily terminate his employment after being demoted, thereby making a claimant eligible for benefits under
The relevant facts are that on January 13, 1992, the claimant, Darrell Callwood, began working for appellant, Allegheny Valley School (“AVS“), an institution that provides for the care and education of developmentally disabled individuals, as an assistant house manager for the second shift2 at a salary of $16,000 per year plus medical and other fringe benefits. The assistant house manager position was classified by AVS as a management staff position. Beginning early in his employment with AVS, claimant‘s supervisors met with him repeatedly in order to counsel claimant on deficiencies in his job performance. Some of the issues brought to claimant‘s аttention were his failure to follow established routines, his inability to deal effectively with the staff, his failure to use good judgment at work, his deficiency in reporting information in a timely and accurate manner, and his inability to carry out his job responsibilities in a consistent and professional manner.
On July 29, 1994, while claimant was still employed as assistant house manager on the second shift at an increased salary of $18,725 per year, AVS informed claimant that he was being demoted from the assistant house manager position because of his continued inability to perform the responsibilities associated with this position. In place of the assistant house manager position, AVS offеred claimant employment as either a house manager aide or as a developmental care
Claimant then filed for unemployment compensatiоn benefits with the Office of Employment Security. On August 19, 1994, the Office of Employment Security found that claimant had a necessitous and compelling reason for voluntarily terminating his employment with AVS and that claimant was eligible for benefits under
AVS timely appealed this decision and the appeal was assigned to an unemployment compensation referee. The referee conducted hearings on September 20, 1994, November 22, 1994, and December 20, 1994. At these hearings, claimant testified that he did not believe he was demoted. Instead, claimant testified that he believed that he was discharged from the assistant house manager position and was offered reemplоyment in the other positions offered by AVS. Claimant stated that he did not accept any of the other positions because they provided significantly less compensation than he had previously received as assistant house manager. Claimant, however, admitted at the hearings that he had failed to perform his job duties on certain occasions.
AVS countered claimant‘s testimony by presenting the testimony of claimant‘s supervisors. These persons included AVS‘s house manager, its administrator, its residential services director and its personnel services director. These four witnesses testified about the counselling and consultation provided to claimant bеcause of his continued inability to perform the responsibilities of his position as assistant house manager. Examples of some of the reasons offered by AVS‘s witnesses for claimant‘s demotion included claimant‘s failure to follow established routines when presenting problems to his supervi
On January 20, 1995, the referee determined that the еvidence supported AVS‘s contention that claimant was demoted because of poor job performance. The referee also determined that AVS offered claimant continuing employment at a reduced wage and that claimant voluntarily terminated his position. The referee, however, concluded that the demotion and resulting wage reduction created a necessary and compelling reason for claimant‘s voluntary termination. Thus, the referee affirmed the determination of the Office of Employment Security that claimant was entitled to unemployment compensation benefits under
AVS timely appealed this deсision to the Unemployment Compensation Board of Review (“Board“). On March 30, 1995, the Board, without holding further hearings and without the presentation of further evidence, essentially adopted the facts presented in the referee‘s opinion. In addition to adopting the referee‘s factual determinations, the Board opined that claimant had worked to the best of his abilities and concluded that claimant‘s demotion and reduction in pay were unreasonable and unjustified since claimant had worked to the best of his abilities. Thus, the Board affirmed the referee‘s decision to grant benefits to claimant.
AVS then timely appealed the Board‘s grant of benеfits to the Commonwealth Court. In a published opinion, the Commonwealth Court, relying on Old Forge Bank v. Unemployment Compensation Bd. of Review, 666 A.2d 761 (Pa.Cmwlth. 1995),3 applied the rule of law that when a claimant‘s demotion
This Court granted allocatur in order to address what factor or factors must be considered to support a finding that a claimant had necessitous and compelling reasons for voluntarily terminating employment after being demoted so that he would be entitled to benefits under
The mere fact that a claimant voluntarily terminates his employment does not alone act as an absolute bar to receiving unemployment compensation benefits. See Monaco v. Com., Unemployment Compensation Bd. of Review, 523 Pa. 41, 47, 565 A.2d 127, 130 (1989). Instead, a claimant is entitled to benefits under
In Greco v. Unemployment Compensation Bd. of Review, 126 Pa.Commw. 531, 560 A.2d 300 (1989), Southeastern Pennsylvania Transportation Authority v. Com., Unemployment Compensation Bd. of Review, 109 Pa.Commw. 191, 531 A.2d 60 (1987), and Unemployment Compensation Bd. of Review v. Tune, 23 Pa.Commw. 201, 350 A.2d 876 (1976) (collectively, the “Tune” line of cases), the Commonwealth Court recognized that employers in Pennsylvania can properly demote people as a form of discipline or for other legitimate business purposes. When a claimant voluntary quits after being demоted, then, under the Tune line of cases, the claimant‘s eligibility for benefits under the “necessitous and compelling” language of
The Board and claimant in this matter do not agree with AVS‘s position. Instead, they urge the Court to affirm the rule of law stated in Old Forge, supra. In Old Forge, the Commonwealth Court expressly overruled the Tune line of
Our determination of which Commonwealth Court interpretation is correct depends upon the controlling statutory language. When reviewing a statute, we are guided by the
The public policy of the Unemployment Compensation Law can be found in
Economic insecurity due to unemployment is a serious menace to the health, morals, and welfare of the people of the Commonwealth. Involuntary unemployment and its resulting burden of indigency falls with crushing force upon the unemployed worker, and ultimately upon the Commonwealth and its political subdivisions in the form of pоor relief assistance ... The Legislature, therefore, declares that in its considered judgment the public good and the general welfare of the citizens of this Commonwealth require the exercise of the police powers of the Commonwealth in the enactment of this act for compulsory setting aside of unem
ployment reserves to be used for the benefit of persons unemployed through no fault of their own.
[T]he declared public policy of the Commonwealth of Pennsylvania is to provide economic sustenance to persons unemployed through no fault of their own. Section 3 of the Act is the foundation upon which distinct provisions of the Unemployment Compensation Law rest for interpretative purposes. The purpose of this section is to provide economic reassurance for those workers who are involuntarily unemployed. The intent of the Act is also to sustain those employees who are idle through no fault of their own.
Tronzo, 514 Pa. at 30, 522 A.2d at 547 (citations omitted).
As noted above, this Court has never spoken to the proper inquiry for determining whаt constitutes necessitous and compelling reasons for an employee to voluntarily terminate his employment following a demotion. This Court, however, has spoken in general terms of what constitutes necessitous and compelling reasons under
[I]t can be said that “good cause” for voluntary leaving one‘s employment (i.e. that cause which is necessitous and compelling) results from circumstances which produce pressure to terminate employment that is both real and substantial, and which would compel a reasonable person under the circumstances to act in the same manner.
Id. at 358-59, 378 A.2d at 832-33.
Statutes, or parts of statutes must be read in pari materia when they relate to the same class of persons or things.
Applying these rules of statutory construction, Section 3 and
Therefore, we reject the current reasoning of the Commonwealth Court in Old Forge, supra since it is not an accurate statement of the law. Instead, we adopt the reasoning from the Tune line of cases that if a claimant refuses to accept a justified demotion and voluntarily quits, the claimant is ineligible for benefits under Section 402(b) because he is unemployed as a result of his own fault and he terminated his employment without a necessitous and compelling reason.
Policy reasons also support this interpretation that a determination of necessitous and compelling reasоns in a voluntary
A review of thе record in this case shows that claimant admitted that he was delinquent in completing the required documentation of the assistant house manager position. The record also shows that AVS counseled and warned claimant of deficiencies in his job performance almost from the time he was hired until approximately a year and a half later when he was demoted. Moreover, the record established that, despite this counselling, claimant was unable to carry out the responsibilities of the assistant house manager position, that he consistently used poor judgment in his performance and that he continued to have problems supervising his staff. These factors demonstrated that AVS was justified in demoting claimant. Thus, claimant‘s voluntary termination was the result of his own fault and, accordingly, he did not have necessitous and compelling reasons for voluntarily terminating his employment with AVS. Therefore, claimant was ineligible for benefits under Section 402(b) of the Unemployment Compensation Law and we reverse the order of the Commonwealth Court affirming the granting of benefits to claimant.
NEWMAN, J., did not participate in the consideration or decision of this case.
CAPPY and NIGRO, JJ., file dissenting opinions.
CAPPY, Justice, dissenting.
I am compelled to dissent. Ultimately, the legal issue to be decided in this appeal is what analytical framework shall be used to determine the propriety оf unemployment compensa
[I]f a worker leaves his employment when he is compelled to do so by necessitous circumstances or because of legal or family obligations, his leaving is voluntary with good cause, and under the act he is entitled to benefits. The pressure of necessity, of legal duty, or family obligations, or other overpоwering circumstances and his capitulation to them transform what is ostensibly voluntary unemployment into involuntary unemployment.3
Thus, in order to determine whether an employee had a “necessitous and compelling” reason for leaving a position, the focus of the inquiry is on the impact of these circumstances upon the employee. Philadelphia Parking Authority v. Unemployment Compensation Bd. of Review, 654 A.2d 280, 282 (Pa.Cmwlth.1995).
Simply stated, the majority‘s framework is incomplete. Truly compelling circumstances such as where an employee is demoted from full-time to part-time status leaving her with
Not only does the majority‘s framework fail to consider the сircumstances surrounding an employee‘s departure after a demotion where an employer acts in good faith, but it also fails to protect an employee against an unscrupulous employer who attempts to evade the Law. Again, an example is demonstrative of the shortcomings in the majority‘s approach.
It is easy to envision a situation where an employer is faced with an employee who is not meeting performance expectations. Rather than terminate the employee and be saddled with the expense of unemployment compensation benefits, this unscrupulous employer demotes the employee, again justifiably so based upon the employee‘s admitted performance shortcomings. However, the demotion is draconian; it is to a position which requires a 90% salary cut and a loss of medical benefits. The employee is forced to “voluntarily” leave his new position. In essence, the employer has constructively discharged the employee, yet the employee is left without unemployment compensation benefits or recourse because the demotion was “justified.” The employer in this example would be able to violate the very purpose of the Law and escape having to pay benefits.
Thus, it is clear thаt the analytical framework embraced by the majority has two basic, and in my mind fatal, flaws. Moreover, I believe that the reasons offered by the majority in support of adopting that framework are inconsistent with the Law and are simply unpersuasive.
It is axiomatic that if an employee is terminated for performance problems, i.e., mere incompetence or inability, yet was working to the best of his ability, he will receive benefits, and thus, he is unemployed through no “fault” of his own. Therefore, it simply does not follow that if an employee is demoted for the same performance problems, and again was working to the best of his ability, the demotion is due to the “fault” of the employee. By focusing solely on a fault concept, I believe that the majority improperly treats a demotion for mere incompetence or inability the same as a demotion for willful misconduct, i.e., inter alia, a willful or wanton disregard of the employer‘s interests.
There may arise a situation where an employee‘s conduct constitutes willful misconduct and the employer, rather than terminating the employee, demotes the employee as discipline, however, a demotion, such as in the case sub judice, is not always for willful misconduct. In fact, an employer will often demote an employee, who is working to the best of his ability, yet who is not meeting expectations in a certain position, in
While the majority improperly equates these two types of demotions, the Old Forge framework properly treats these circumstances as distinct. As the Commonwealth Court in this matter noted, if an employee‘s conduct constitutes willful misconduct and the employer demotes the employee, the sole inquiry will be whether the demotion was justified. If the demotion is justified, the employee who, after engaging in willful misconduct, voluntarily leaves his new position will be denied benefits. Conversely, if an employee is working to the best of his ability, yet still suffers from performance deficiencies, and his employеr demotes him, the relevant inquiry will first be whether the demotion was justified, and if so, whether the demotion was reasonable. Only if the employee can prove that the demotion was unreasonable would he be able to receive unemployment compensation benefits.5
Finally, the policy concerns suggested by the majority are unfounded. The majority wants us to believe that if a tribunal examines any factor other than the justification for the demotion, then this would lead to “employers never demoting employees because of fear of being subject to claims for benefits,” and would result in “employers leaving incompetent people in positions they are incapable of performing.” These concerns are clearly without basis. Contrary to the majority‘s assertions, under the Old Forge analysis, an employer would still be encouraged to demote an employee whose performance was unacceptable, i.e., the employer will not have to pay unemployment compensation benefits. However, the demotion would simply have to be justified and reasonable. Moreover, an employer has always had, and would continue to have, the option of terminating an incompetent employee and paying
In conclusion, the analytical framework adopted by the majority is flawed because it fails to account for certain limited circumstances in which an employee may have a necessitous and compelling reason to leave his employment, even after a justifiable demotion. Moreover, the reasons offered by the majority for adopting such a framework are inconsistent with the Law and are simply unpersuasive.
For all of the above-stated reasons, I would affirm the well-reasoned, comprehensive, and fair decision of the Commonwealth Court.
NIGRO, Justice, dissenting.
I would affirm the Commonwealth Court‘s decision based upon Old Forge Bank v. Unemployment Compensation Bd. of Review, 666 A.2d 761 (Pa.Cmwlth.1995). I join in Mr. Justice Cappy‘s dissenting opinion with the exception of his statements that a necessitous and compelling reason to voluntarily leave employment requires “the most drastic circumstances.” To the contrary, a necessitous and compelling reason to leave “results from circumstances which produce pressure to terminate employment that is both real and substantial, and which would compel a reasonable person under the circumstances to act in the same manner.” Taylor v. Unemployment Compensation Bd. of Review, 474 Pa. 351, 358-59, 378 A.2d 829, 832-33 (1977); Old Forge, 666 A.2d at 764.
Notes
Ineligibility for compensation
An employee shall be ineligible for compensation in any week—
(b) In which his unemployment is due to voluntarily leaving work without cause of a necessitous and compelling nature ...
43 P.S. § 802(b) 43 P.S. § 751, et seq.
The Old Forge court crafted a comprehensive, yet easily applied, analytical framework to be used when an employee is demoted for performance shortcomings where the employee is working to the best of his ability. This framework consists of two straightforward inquiries: 1) was the demotion justified and 2) was the demotion reasonable. Thus, even if an employer was justified in demoting an employee, under the second prong of the framework, if an employee establishes an unreasonable change in the terms and conditions of employment, i.e., an unreasonable demotion, the employee will have had a necessitous and compelling reason to voluntary terminate his employment. This second inquiry, as explained more fully in the body of the opinion, is required by the Law and is absolutely necessary to make a full determination of the propriety of benefits in this context.