Before making big changes to your benefit plans, calculate the cost savings against the possible cost of paying your share of unemployment compensation for employees who quit in protest over those benefit changes.
Reason: Employees who quit because they object to company benefit changes can be eligible for unemployment compensation.
Under Pennsylvania law, any substantial change in employment terms can qualify as a "necessitous and compelling" reason to resign, which would qualify employees for unemployment benefits.
Such "compelling" reasons can include eliminating health insurance coverage and even raising employees' premiums or co-payments.
Case in point: Susan Rachor, comptroller at Brunswick Hotel & Convention Center, quit when her employer went bankrupt and stopped providing health insurance.
Under new, the hotel shopped for another policy but couldn't persuade enough employees to sign up and pay half the premium amount.
When Rachor went on unemployment, the hotel appealed, arguing that she didn't have a compelling reason to quit.
The Commonwealth Court disagreed and upheld the benefit award. It ruled that unilateral termination of health benefits materially changed the terms and conditions of employment, a compelling reason to quit (Brunswick Hotel & Conference Center v. Unemployment Compensation Board of Review, No. 464 C.D., 2006, Commonwealth Court, 2006)
Note: Citing an earlier case in which an employee received unemployment benefits when her employer demanded a health premium of $170 per month, the court reasoned that such changes were a valid reason for voluntarily quitting.
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