PA Employers are not entitled to workers' comp benefit credit for Federal Pandemic Unemployment Compensation paid under the CARES Act

Federal Pandemic Unemployment Compensation paid to an Employee under the CARES Act is not equivalent to "Unemployment Compensation Benefits" for which an Employer is entitled to a credit under Section 204(a) of the PA Act.

See: Carbon Lehigh Intermediate Unit #21 v. WCAB (Waardal), a Pennsylvania Commonwealth Court decision published at No. 750 C.D. 2021; filed on January 3, 2022.

HOLDING: The sole issue before the Court was whether Federal Pandemic Unemployment Compensation under the CARES Act is the equivalent to UC benefits for which a PA Employer is entitled to a credit under Section 204(a) of the Workers Compensation Act.

The Carbon Lehigh decision relied upon its prior analysis in Dietrich Industries, Inc. v. WCAB (Shank) (Pa. Cmwlth. 1999) to conclude that no credit is available to the Employer for the CARES benefits paid. In Shank the Court disallowed a credit under Section 204(a) for federally funded trade readjustment allowance (TRA) benefits a claimant received.

The Carbon Lehigh decision arose from Employer's  appeal of the WCAB order affirming the WCJ decision to deny the Employer a credit against its payment of workers’ compensation benefits for the Federal Pandemic Unemployment Compensation that Claimant received pursuant to Section 2104(b)(1) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, 15 U.S.C. § 9023(b)(1).

REASONING of the COURT

As one may have anticipated, the Commonwealth Court relied upon its decision at Shank to deny the Employer a credit in the instant matter.

In Shank the claimant received sickness and accident benefits following a work-related lower back injury along with UC benefits and TRA benefits, which “were intended to supplement state unemployment insurance benefits.” Shank’s receipt of TRA benefits was subject to various statutory requirements, including exhaustion of his entitlement to “unemployment insurance benefits.”

Shank’s employer sought a credit against workers’ compensation in the amount of Shank’s UC and TRA benefits. A WCJ granted the credit for Shank’s sickness and accident and UC benefits but disallowed a credit for his TRA benefits.

The Commonwealth Court analyzed the employer’s right to a credit under Section 204(a). The Court noted that TRA benefits, which were intended to supplement UC benefits, were funded entirely by the federal government, as was the cost of administering the TRA program. 

Shank’s Employer argued that the funding source for Shank’s TRA benefits was irrelevant, as Section 204(a) made no such distinction when mandating a credit for a claimant’s receipt of UC benefits. The Court disagreed, stating that an Employer’s credit against its obligation to pay workers’ compensation stems from its payment of “regular stated amounts, out of its own general funds or from sick or accident benefits,” which do not constitute “wages or salary for work performed, but which are paid in relief of the employee’s incapacity to work.”

The Court further reasoned that TRA benefits were not among the types of payments delineated in Section 204(a) from which an employer could seek a credit towards its workers’ compensation obligation. They recognized that, where certain items are specifically designated in a statute, omissions are understood to be excluded. Having concluded that TRA benefits were “distinct from the type of benefits contemplated” under Section 204(a), the Court affirmed the denial of a credit to the Employer.

In support of its right to a credit for Claimant’s receipt of Federal Pandemic Unemployment Compensation, this Employer essentially resurrects the argument the Court rejected in Shank – that Section 204(a) makes no distinction as to the funding source of a claimant’s UC benefits.

The Court stated – “We are similarly unpersuaded by Employer’s attempts to distinguish this matter from our holding in Shank”. They found it was noteworthy that Pandemic Compensation is available to individuals who are not otherwise eligible to receive “regular” UC benefits, and the CARES Act provides for federal reimbursement of the amounts paid by a state for Pandemic Compensation. Furthermore, Pandemic Compensation is referenced separately from “regular compensation” throughout the relevant provisions of the CARES Act.

The Court concluded that these distinctions render Pandemic Compensation sufficiently “distinct from the type of benefits contemplated” under Section 204(a) of the Act.

It was acknowledged that Section 204(a), which was last amended in 1996, did not contemplate the benefits at issue here. However, it is clear that the General Assembly has not seen fit to amend Section 204(a) in the two decades following the decision in Shank, so as to specify that the credit provisions of Section 204(a) encompass the types of federally funded benefits at issue in Shank and the instant matter.

Ultimately, the legislative intent behind Section 204(a) is to prevent an employer from having to pay “duplicate benefits for the same loss of earnings.” (emphasis added). Allegheny Ludlum Corp. v. Workers’ Comp. Appeal Bd. (Bascovsky), (Pa. Cmwlth. 2009). Disallowing a credit for Pandemic Compensation that is wholly paid for by another entity does no disservice to the overall purpose of Section 204(a), nor does it place Employer in the position of “paying duplicate benefits for the same loss of earnings.”