No voluntary benefit waiver during employer appeal

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| U.S. DEPARTMENT OF LABOR | CLASSIFICATION |
| Employment and Training Administration | |
| Washington, D. C. 20210 | UI |
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| | CORRESPONDENCE SYMBOL |
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| | TEURL |
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| | ISSUE DATE |
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| | September 12, 1985 |
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| RESCISSIONS | EXPIRATION DATE |
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| | March 31, 1987 |
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| DIRECTIVE | : | UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 34-85 |
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| TO | : | ALL STATE EMPLOYMENT SECURITY AGENCIES |
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| FROM | : | BARBARA ANN FARMER |
| | | Acting Administrator |
| | | for Regional Management |
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| SUBJECT | : | Voluntary Waiver of Benefit Rights by a Claimant Pending the Outcome of an Employer Initiated Appeal |
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Purpose. To reaffirm the interpretation that benefits may not be delayed once a determination of entitlement has been made even if the claimant voluntarily agrees to a waiver of benefits pending the outcome of an employer initiated appeal.

References. Section 303(a)(1), SSA; UIPL 1126, "The Java Decision," dated June 14, 1971.

Background. The U.S. Supreme Court's Java Decision (California Human Resources Department v. Java, 1971) interpreted the "when due" requirement in Section 303(a)(1) of the Social Security Act as "...the time when payments are first administratively allowed as a result of a hearing of which both parties have notice and are permitted to present their respective positions; ...." As a result of this decision, State law and procedure must provide for:

(1) Paying benefits promptly, after a determination has been made in the claimant's favor, regardless of the pendency of the appeal period or of any appeal that has been taken from the determination; and

(2) Providing reasonable notice to both the claimant and employer of the time and place of the predetermination fact-finding hearing.

A question has arisen in one State as to whether a State may, consistent with the "when due" requirements of Section 303(a)(1), SSA, as interpreted by the Java Decision, provide for a voluntary waiver by the claimant of his/her rights to benefits pending the outcome of an appeal.

Because this question has broad applicability, this UIPL is being issued in response to the question.

Interpretation. Any defferal of receipt of benefits pending an appeal of the determination which awarded benefits is inconsistent with Section 303(a)(1), SSA, even where the defferal is completely voluntary on the claimant's part. Section 303(a)(1) of the SSA, requires States to provide "such methods of administration...as are found by the Secretary of Labor to be reasonably calculated to ensure full payment of unemployment compensation when due." (Emphasis added.) Similarly, Sections 303(a)(5), SSA, and 3304(a)(4), FUTA, which mandate the withdrawal of State unemployment fund monies solely "in the payment of unemployment compensation," similarly require full payment of such compensation when due.

A voluntary waiver of benefits by a claimant pending the outcome of an appeal does not change the "when due" requirement. Should the claimant's eligibility be affirmed upon appeal, the voluntary waiver of benefits would become an improper waiver of benefits "due" during the period of appeal. Further, it could be very difficult, if not impossible, to determine whether a claimant given a form to waive benefits voluntarily signed it of his/her own free will.

One approach to implement this policy which would safeguard the claimant's right to payment "when due" would be to advise the claimant in a written statement included with his UI benefit check that his determination of eligibility has been appealed and that any amounts received by him while the appeal is pending might be subject to recovery by the State agency if that determination is reversed. In this way, the claimant can decide for himself whether to spend or save the monies received in benefits, without undue pressure from the agency.

Reaffirmation. In summary, under Federal requirements:

• a) unemployment benefits must be paid "when due" in line with the requirements of Section 303(a)(1), SSA, and the Supreme Court Java decision; and

b) a voluntary system whereby claimants can defer receipt of benefits due pending the outcome of an employer initiated appeal is an improper waiver of benefit rights which violates the "when due" requirement and Sections 303(a)(5), SSA, and 3304(a)(4), FUTA.

Action Required. SESAs are requested to review their procedures and make any changes needed to conform with this policy interpretation.

Inquiries. Direct inquiries to appropriate regional office staff