Opinion ID: 1927438
Heading Depth: 1
Heading Rank: 1

Heading: Dismissal Payments

Text: Any payment made by an employer to an employee on account of dismissal, that is involuntary separation from the service of the employer, constitutes wages regardless of whether the employer is legally bound by contract, statute or otherwise to make such payments. 26 C.F.R. 31.3401(a)-1(b)(4). The FUTA regulations provide that wages include all remuneration . . . unless such remuneration is specifically excepted under 3306(b) [2] . . . 26 C.F.R. 31.3306(b)-1(b). Moreover, the IRS has ruled that where, as here, a manufacturing company ceases operations and makes severance payments pursuant to a collective bargaining agreement, these payments are considered wages for FUTA, FICA and withholding. Rev.Rul. 71-408 (CB 1971-2, 340). Appellee, the Commonwealth, does not dispute this issue in the abstract, but rather contends that Appellant has not demonstrated the basis for his severance pay, i.e., whether it was an accumulated and deferred payment for past work during the course of his employment or whether it was an inducement for early retirement. The Commonwealth contends that the record merely indicates that Appellant chose, for personal reasons, the option of taking severance pay and leaving employment, and that since Appellant had the burden of proving his eligibility, this is fatal to his appeal. The Commonwealth's contention is without merit since the assertion that factually the severance might not have been wages appears contrary to the law discussed above, and, moreover, the assertion ignores the joint stipulation of fact filed with the Commonwealth Court after Appellant received the monies. In pertinent part, the stipulation reads: . . . counsel for the parties have stipulated that the actual receipt of wages has now occurred. (emphasis supplied) A copy of the Stipulation is attached to Appellant's brief. The critical question in this case, therefore, is whether the Board was bound by its own regulations, specifically 34 Pa.Code § 61.3(a) set forth above, to deem wages paid (herein on January 10, 1983) even though the wages had not actually been reduced to the possession of the employee (Appellant) on that date. We hold that the Board was in error in failing to apply its own regulations and, therefore, reverse. The relevant portions of the Act here at issue, Section 4(x), 43 P.S. § 753(x), and Section 404(b), 43 P.S. § 804(b), refer to remuneration paid or to wages which were paid. It would be a narrow-minded person, indeed, who concludes that remuneration paid or wages which were paid can be interpreted in only one specific way. Under the Act, the Unemployment Compensation Department is authorized to administer and enforce the Act and is given power and authority to adopt rules and regulations pursuant thereto. See, 43 P.S. § 761. The regulation which supports Appellant's position was properly adopted under authority delegated by the legislature. While we need not address the question of the extent to which our courts must defer to an administrative regulation, it is clear that as to the administrative agency or body itself, a duly promulgated regulation has the force and effect of law. See, Pennsylvania Human Relations Commission v. Norristown Area School District, 473 Pa. 334, 350, 374 A.2d 671, 679 (1977), citing K. Davis, Administrative Law Treatise, § 5.01 (Supp.1976). It was, therefore, improper for the Board to ignore, or to fail to apply, its own regulation. The Commonwealth argues that the regulation at issue appears in Chapter 61 of the Office of Employment Security Rules and Regulations dealing solely with Administration and that the section only applies, therefore, to employers' reporting of wages for purposes of collection of the fund. The argument is without merit. If the Commonwealth were correct, the regulation should have been included in Chapter 63 of the regulations dealing with Responsibilities of Employers. Moreover, the Commonwealth offers no cogent reason why one rule should apply to employers while an entirely different rule applies to employees. The Commonwealth cites the recent Commonwealth Court decision in Anthony T. Rebo v. Unemployment Compensation Board of Review, 92 Pa.Commonwealth Ct. 502, 499 A.2d 732 (1985), dealing with the same regulation now at issue before this Court. There, Commonwealth Court held that: [T]his regulation, however, pertains to an employer's reporting of wages for purposes of the collection of the fund and is not relevant to the issue presented here. We are in agreement with the Board that different policy considerations apply in determining when payment occurs under Regulation 61.3 as opposed to Section 404(b) of the Law. 499 A.2d at 735. There is no indication, however, what those policy considerations might be, and we can discern none. To the contrary, a straightforward application of the relevant rule would carry out the humane and liberal purposes of the Act. In Penn Hills School District v. The Board of Review, 496 Pa. 620, 437 A.2d 1213 (1981), this Court reaffirmed long-standing principles of statutory construction with respect to the Unemployment Compensation Law. We recognized the remedial purposes of the Act to insure that employees who become involuntarily unemployed are provided some semblance of economic security. Such remedial legislation must always be interpreted so that the benefit sections are liberally and broadly construed to alleviate the distress of the involuntarily unemployed. More recently, in Lopata v. The Unemployment Compensation Board of Review, 507 Pa. 570, 493 A.2d 657 (1985), we restated the proposition that unless the provisions of the law unmistakeably compel the conclusion that benefits are to be denied, a remedy is to be found consonant with the purposes of the law, i.e., the granting of compensation. As Appellant's brief points out, the regulation which Appellant seeks to apply is also congruent with federal law. There are no provisions in FUTA or the Social Security Act which preclude Pennsylvania from allocating severance pay to the quarters in which it is paid or generally paid for purposes of calculating base year wages. A state is free to design its unemployment compensation law and establish its own eligibility requirements so long as it does not conflict with the federal statutes. Novak v. Unemployment Compensation Board of Review, 73 Pa.Commonwealth Ct. 148, 457 A.2d 610 (1983). On this last point, the Commonwealth apparently does not disagree. Under the circumstances, we would ordinarily remand this case to Commonwealth Court for further proceedings. In this case, however, application of the relevant regulation is so simple and straightforward that a remand directly to the Unemployment Compensation Board for the purpose of reversing the Referee and awarding benefits to Appellant would be more sensible and expeditious. It is so ordered. NIX, C.J., files a concurring opinion. HUTCHINSON, J., files a concurring opinion in which FLAHERTY and ZAPPALA, JJ., join.