Getting Laid Off After Returning to Work (Following Period of Disability) Because of Employer's Facility Relocation
In Kramer v. Workers' Compensation Appeal Board (Rite Aid Corp.), 584 Pa. 309, 883 A.2d 518 (2005), a claimant returned to work following a period of disability and was subsequently laid off after her employer relocated its facility to Maryland.
Workers' compensation benefits were reinstated.
Claimant also received a severance check in the amount of $ 3,355.02 pursuant to the terms of the collective bargaining agreement her union had negotiated with employer.
Reversing this Court, the Supreme Court held that under Section 204(a) of the Act, the employer was entitled to a credit against compensation benefits in the amount of claimant's severance payment.
The dispositive issue in Kramer was whether the credit in Section 204(a) of the Act applied to self-insured employers or only to insured employers.
In Kramer, the Supreme Court considered:
(1) whether Section 204(a) of the Act allows all employers, or only self-insured employers, to take an offset against a claimant's workers' compensation benefits in the amount of a severance payment to the claimant; and;
(2) whether such an offset violates equal protection considerations under the Pennsylvania and United States Constitutions since non-injured employees are able to retain their full severance benefit upon layoff.
The Court held that all employers may seek an offset of severance payments against workers' compensation benefits, regardless of whether the employer is self-insured or privately insured. Kramer, 584 Pa. at 330, 883 A.2d at 530.
The Court also held that Section 204(a) applies equally to all individuals receiving workers' compensation benefits. Id. at 333, 883 A.2d at 532.
The Court further observed that Section 204(a) is reasonably related to a legitimate state interest in reducing the cost of workers' compensation benefits in Pennsylvania, thereby passing equal protection scrutiny under the rational basis test. Id. at 338, 883 A.2d at 536.
In reviewing the purpose of Section 204(a), the Court explained as follows:
While offering the prospect of certain recovery to workers irrespective of fault on the part of their employers, the Act also offers employers relative cost-certainty in the form of limited exposure in the event of a work injury. Id. at 337, 883 A.2d at 535.
The Court rejected the claimant's argument that workers' compensation benefits and severance benefits are intended to compensate different losses.
The Court reasoned:
The worker experiences only one loss of earnings at a time, even if there is a prospect of compensation for that loss from multiple sources.
The offset does not disadvantage the injured worker vis a vis his uninjured colleagues who also receive severance benefits because those workers do not receive a double benefit, in the form of workers' compensation payments, from the employer.
Because the employment relationship is the basis for providing both severance payments and workers' compensation benefits ... the employer can avoid paying duplicate benefits for the same loss of earnings by using the offset. Id. at 338, 883 A.2d at 535.