Voluntary Retirement and Unemployment in Pennsylvania

My Employer Said It Would Not Contest My Claim for Pennsylvania Unemployment, So Why Am I Being Denied Benefits?

I receive many phone calls from employees who accepted early retirement benefits with a promise from their employer that it “would not contest unemployment,” only to later be denied unemployment benefits by the Pennsylvania Unemployment Service Center. Let me explain how this works.

In order to be eligible for unemployment compensation in Pennsylvania, you must be available for suitable work. Thus, the first inference drawn by Unemployment when you advise that you are no longer employed because you “took early retirement,” is that you have retired not just from your former job, but from all employment. Since true retirees by definition are presumed to no longer be looking for work, the Service Center will immediately lean towards denying you benefits on the grounds that you are not available for suitable work.

The Service Center will then contact your former employer, and ask it to provide truthful information as to why you are no longer employed.  Correctly believing that it is required to provide such truthful information to the Service Center, the company truthfully states that you took early retirement.  In the employer's mind, and in fact, merely telling the Service Center these facts does not constitute "contesting your claim."

Can I Get PA Unemployment Benefits If I Retire from My Job?

However, you can get over that hurdle by advising that you merely retired from your former job, but are still interested in pursuing employment.

Assuming you are not truly retired, the next (and biggest) problem you have is that your retirement was voluntary. A voluntary retirement is considered a voluntary quit. If you retire in order to obtain a severance or retirement benefits, but would otherwise have remained employed had you not elected to retire, you will not be entitled to unemployment benefits.

You Can Get Unemployment Benefits in PA if You "Retire" in Lieu of Immediate Termination

However, if you were given the choice between immediate termination and early retirement, and selected early retirement, you will be eligible for unemployment, provided that your termination was indeed imminent. If this option is presented to you, you should call an employment lawyer at once prior to accepting or rejecting the offer. The key here is that your termination must be imminent not, for example, something that will very likely occur a week, month or year down the road.

Can an Offer of Retirement Versus Termination be Evidence of Unlawful Age Discrimination?

I should note, also, that if you are given the option between retirement and immediate termination, there is a reasonable likelihood that your age is playing a role in the employer's decision-making. If that is the case, you may very well have an age discrimination claim. Hence, where such circumstances are presented to you, you should certainly consult with a qualified employment lawyer before making a decision on the options presented to you by your employer.

Of course, the main dilemma one faces is weighing the benefits of the severance and benefits offered in connection with the RIF against the value of the unemployment benefits you receive if you are terminated as part of a RIF (if you are RIFed, you will be entitled to unemployment benefits – assume your benefits will be the equivalent of roughly 10% of your earnings, with the maximum being $575 per week). The dilemma is intensified because, in most cases, you will only ne provided the retirement benefits if you sign a Release, which will eliminate your right to later file a lawsuit for age discrimination.

Additional questions on Pennsylvania Unemployment Law? Click Here to go to our Post addressing FAQs on a wide variety of Pennsylvania unemployment law issues.



John and His Lovely Wife, Katherine



Interested in the soup to nuts on employment law in general?  Click Here to read our explanation of the most significant principles faced by employees in the United States.

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