Court Opinion

ID: 9758926
Source: CourtListenerOpinion
Date Created: 2023-08-28 23:56:16.836718+00
Date Added: 2024-06-11T10:01:31.666850
License: Public Domain

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 of unemployment compensa*367tion benefits in matters where an employee who is demoted because of performance shortcomings leaves his employment. Today, the majority adopts an incomplete and inadequate analytical framework which I believe is contrary to both the language of the Unemployment Compensation Law (Law)1 and this court’s prior decisions. Unfortunately, the majority rejects the more comprehensive and fair analytical framework recently adopted by the Commonwealth Court, which, consistent with the unemployment compensation statute, properly protects an employer’s decision to demote an employee, as well as provides a safety net for an employee who is working to the best of his ability but who is faced with a demotion so drastic or severe that he is compelled to leave his new position.2
*368There are two major flaws with the analytical framework adopted by the majority. First, the framework is contrary to the Law, and in essence, amends the Law, as it fails to consider whether, even after a justified demotion, the claimant had necessitous and compelling reasons to leave his employment. Second, the framework fails to account for the situation where an unscrupulous employer attempts to evade the payment of benefits by constructively discharging an employee through the pretext of a demotion. Each of these shortcomings points to an adoption of the Commonwealth Court’s Old Forge approach.
Section 402(b) of the Law provides that an employee who voluntarily terminates his or her employment may still be eligible for benefits if he or she had a necessitous and compelling reason for doing so. 43 P.S. § 802(b). This court stated in Taylor v. Unemployment Compensation Bd. of Review,:
[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 overpowering 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 *369the devastating loss of all medical benefits, or where an employee is demoted and incurs a crippling cut in monetary compensation which leaves the employee unable to support a family would not be considered under the single prong analysis of the majority. The Law clearly requires a review of such circumstances and the second prong of Old Forge satisfies that mandate. Under the second prong of the Old Forge analytical framework, the employee is at least given the opportunity, as required by the Law, to demonstrate that she had a necessitous and compelling reason to voluntarily leave her employment, i.e., that the demotion was so drastic or severe so as to be unreasonable.
Not only does the majority’s framework fail to consider the circumstances 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 that 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.
*370The majority conducts a statutory analysis to support its position. The majority concludes that because the underlying policy of the Law is to provide benefits to those who are unemployed “through no fault of their own,” then, a claimant will not have a necessitous and compelling reason to leave his employment if his demotion was justified “because the change in job duties and remuneration was the result of claimant’s fault.” This reasoning may have some superficial appeal, however, it does not withstand close scrutiny and is in my mind contrary to the unemployment compensation statute.4
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 *371hopes of “rehabilitating” that employee and finding him a new position in which the employee can perform to a satisfactory level.
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 employer 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 *372that employee unemployment compensation benefits, benefits which are limited in both duration and amount. Thus, the policy concerns offered by the majority ring hollow and fail to support its approach.
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.

. 43 P.S. § 751, elseq.

. In short, the majority’s analytical framework is restricted to a single inquiry: was the demotion justified. If the demotion was justified, the claimant cannot receive benefits. This limited inquiry was expressly rejected by the Commonwealth Court in its recent, 6-1, en banc decision in Old Forge Bank v. Unemployment Compensation Bd. of Review, 666 A.2d 761 (Pa.Cmwlth. 1995). In Old Forge, the Commonwealth Court readopted its original interpretation of the Law. In doing so, the Old Forge court expressly overruled SEPTA v. Unemployment Compensation Bd. of Review, 109 Pa.Cmwlth. 191, 531 A.2d 60 (1987) to the extent that case implied that the employer's justification for a demotion is the only factor to be considered in these matters. As the SEPTA court relied upon Unemployment Compensation Bd. of Review v. Tune, 23 Pa.Cmwlth. 201, 350 A.2d 876 (1976), and Greco v. Unemployment Compensation Bd. of Review, 126 Pa.Cmwlth. 531, 560 A.2d 300 (1989) relied upon SEPTA, to the extent these cases stand for the same proposition, they are presumably overruled as well. Thus, the single inquiry framework once embraced by the Commonwealth Court was expressly rejected by its creator.
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.

. Taylor, 474 Pa. at 359-60, 378 A.2d at 833, quoting Sturdevant Unemployment Compensation Case, 158 Pa.Super. 548, 556-57, 45 A.2d 898, 903 (1946)(footnote omitted)(emphasis supplied); see also, Pittsburgh Pipe and Coupling Co. v. Unemployment Compensation Bd. of Review, 401 Pa. 501, 505, 165 A.2d 374, 376 (1960).

. A further significant problem with the majority's analysis is that it primarily relies upon section 3 of the Law, 43 P.S. § 752, which dictates that an otherwise eligible claimant may receive benefits where he has become unemployed "through no fault of his own.” While section 3 is a general statement of statutory objectives, it is also an independent basis for denying benefits to claimants for nonwork-related misconduct, separate and distinct from section 402, 43 P.S. § 802(e), which is used to disqualify claimants for work-related misconduct. SEPTA v. Unemployment Compensation Bd. of Review, 96 Pa.Cmwlth. 38, 506 A.2d 974 (1986). Obviously, section 3 as an independent basis for denying benefits is inapplicable as this matter deals with work-related performance deficiencies.

. Of course, mere dissatisfaction with a demotion is not enough. Only the most drastic circumstances, i.e., the most unreasonable demotions, will allow an employee who has voluntarily left his new position to receive benefits. It is the employee’s burden to show a necessitous and compelling reason for leaving his employment, Taylor, supra, and such employee should be strictly held to this burden.