WEEKLY NET EARNINGS IN SIDELINE SELF-EMPLOYMENT

(Editor’s Note: This regulation has been held invalid. Lerch v. Unemployment Compensation Board of Review, 180 A.3d 545 (Pa. Cmwlth. 2018).)

1. (a) Since an accurate determination of weekly net earnings for a particular week or month will usually be impossible because of the time lapse between the performance of services and the receipt of resulting income. Weekly net earnings for a current calendar year shall be based on net earnings in a previous calendar year or on anticipated earnings in the current calendar year, if operations were not conducted in a previous calendar year, in accordance with the following:

   1. (1) For a claimant engaged in farming, ‘‘gross income’’ from sales and services shall be reduced by subtraction of expenses for labor, feed, seeds and plants, fertilizer and lime.
   2. (2) For a claimant engaged in a business other than farming, ‘‘gross income’’ from sales and services shall be reduced by subtraction of the cost, if any, of goods sold. Cost of goods sold shall include the total cost of merchandise, cost of labor and cost of material and supplies.
   3. (3) The remainder shall be divided by the number of weeks during which the farm or business operated or will operate during a year. The quotient shall represent the weekly net earnings to be used for the purpose of computing benefits payable.
2. (b) Weekly net earnings computed in accordance with subsection (a) applies throughout the benefit year for as long as the business operates in the benefit year.

Notes of Decisions

Net Earnings

The provisions of 34 Pa. Code § 65.121 provide only for the deduction of labor and material costs from gross income in computing the net earnings of a single sideline business; nothing suggests that losses from failing sideline ventures may be deducted from profits of successful sideline businesses in computing weekly income from sideline activities. Frederick v. Unemployment Compensation Board of Review, 423 A.2d 801 (Pa. Cmwlth. 1980).

This regulation is unreasonable because it so severely limits the deductions from gross income of a sideline service business as to eliminate any distinction between gross and net income. This regulation also exceeds the Department’s statutory authority and the Department lacked legal authority to repromulgate the regulation after an appellate court found it was unauthorized. Lerch v. Unemployment Compensation Board of Review, 180 A.3d 545, 553 (Pa. Cmwlth. 2018).

Source

The provisions of this § 65.121 adopted July 1, 1969.