How Do Separation Agreements Affect Unemployment Benefits?

In many circumstances, employees are often asked to resign and sign a Separation Agreement with their employer. Several clients have asked me how this will affect their ability to collect unemployment benefits.

In Pennsylvania, employees who voluntarily quit or are terminated for willful misconduct are not entitled to receive unemployment compensation. However, when a company forces an employee to resign (“resign or you’re fired”), although it seems like a termination, a resignation could be construed by the PA UC office to mean voluntarily quitting and unemployment benefits would be denied. Since you believe that you are being forced out by the company, you will want to protect yourself before signing a Separation Agreement.

When the employer is contacted by the PA UC office to obtain evidence and documentation concerning the termination, the employer would be able to state that the employee resigned, which would lead to the employee being denied unemployment benefits under Section 402(b) requiring an appeal.

If you find yourself in this predicament, contact an attorney. You’ll want to get two things in writing: (1) a statement that you you are not resigning, but are being terminated without cause; and (2) a statement that the employer will not contest your unemployment benefits. Call me at (484) 362-9286 if you would like a Separation Agreement Review.

Whether benefits are denied by the Pennsylvania Department of Labor upon an employee’s application for benefits will depend on who the Service Center determines who initiated the end of the employment relationship. If end of employment was initiated by the employee, benefits would be denied unless the employee had necessitous and compelling reasons for leaving the employer. However, if the end of the employment relationship was initiated by the employer, the employer will have the burden to establish willful misconduct.  If your benefits are denied by the Service Center after signing a Separation Agreement, please contact me at (484) 362-9286 to discuss your case.

Zachary Zawarski is an employment and labor law attorney located in Bethlehem, PA.

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