Unemployment Compensation Review Commission
Chapter Seven

Deductible Income

A.  Earnings

  1. If an individual has earnings, in an amount less than the individual's weekly benefit amou
    Chapter Seven

    Deductible Income

    A.  Earnings

    1. If an individual has earnings, in an amount less than the individual's weekly benefit amount, during the week of an otherwise valid weekly claim, benefits are payable to that partially unemployed individual. The benefits will be paid in an amount equal to the individual's weekly benefit amount minus the amount of earnings in excess of 20% of the individual's weekly benefit amount, rounded to the next lower multiple of one dollar. {ORC §4141.30(C)}
       
    2. Holiday pay
       
      1. Holiday pay will be applied to the week during which the holiday occurs, regardless of when the pay is actually received UNLESS there is a labor-management agreement which specifies the date on which the holiday is to be observed. {OAC 4141-9-05(A)}
         
      2. Holiday pay is deductible, subject to the 20% exclusion, under Ohio Revised Code Section 4141.30(C). {OAC 4141-9-05(B)}
         
    3. An award of back pay is considered earnings. An overpayment order should be issued if unemployment compensation benefits were paid during the period covered by the award, even if the employer withholds what would ordinarily be paid as unemployment benefits.

    B.  Remuneration in Lieu of Notice

    1. Benefits otherwise payable for any week shall be reduced by the amount of remuneration in lieu of notice which a claimant receives with respect to that week. {ORC §4141.31(A)(1)}
       
    2. Remuneration in lieu of notice is a continuation of wages for a designated period after termination of employment. It constitutes wages, is subject to contributions, and may be allocated. {OAC 4141-9-08}
       
    3. Worker Adjustment and Retraining Notification Act (WARN) payments constitute remuneration in lieu of notice. Fegatelli v. Ohio Bureau of Employment Services (2001), 146 Ohio App.3d 275.
       
    4. Allocation {ORC §4141.31(A)(5)}
       
      1. Unless there is a provision in the labor-management agreement, or in the employer's policy, which limits or prevents allocation of remuneration in lieu of notice, the employer may allocate that remuneration.
         
      2. If the employer has the right to allocate remuneration in lieu of notice, but does not do so, the Director or Review Commission shall allocate the remuneration:
         
        1. in an amount equal to the individual's average weekly wage;
           
        2. to the first and each succeeding week following the separation from employment until the payment is exhausted.

    C.  Workers' Compensation

    1. Benefits otherwise payable for any week shall be reduced by the amount of wage loss entitlement under workers' compensation which a claimant receives with respect to that week. {ORC §4141.31(A)(2)}
       
    2. Wage loss entitlement
       
      1. Can be payable under Ohio workers' compensation law to an individual who returns to employment in a position other than the individual's former position, or is unable to find work consistent with the individual's physical capabilities. {ORC §4123.56(B)}
         
      2. Occasionally, the Bureau of Workers' Compensation deducts unemployment compensation benefits from an individual's wage loss entitlement at the same time that ODJFS deducts wage loss entitlement from the individual's unemployment compensation benefits. Nevertheless, under Ohio Revised Code Section 4141.31(A)(2), the Review Commission will affirm any overpayment order resulting from ODJFS deducting wage loss entitlement from unemployment compensation benefits. The workers' compensation law does not have a corresponding provision.
         
    3. When an individual is awarded temporary total disability for a period for which he has already received unemployment compensation benefits, the Bureau of Workers' Compensation shall reimburse ODJFS, and ODJFS will credit the account of the employer(s) that was charged. {ORC §4123.56(A)}
       
    4. A workers' compensation benefits award is based on a conclusion that the individual is unable to work in the individual's previous occupation. State ex rel Ramirez v. Industrial Commission (1982), 69 Ohio St.2d 630. Accordingly, an individual can receive workers' compensation benefits and still be physically able to work under Ohio Revised Code Section 4141.29(A)(4)(a).
       

    D.  Pension, Retirement, and Annuity Plan Payments

    1. Benefits otherwise payable for any week shall be reduced by the amount which a claimant receives as: {ORC §§4141.31(A)(3) and 4141.312(A)}
       
      1. Governmental or other pension; OR
         
      2. Retirement or retired pay; OR
         
      3. Annuity or other similar periodic payment.
         
      4. Benefits shall be reduced by the amount reasonably attributable to the week claimed IF all of the following apply:
         
        1. The pension, retirement, or annuity payment is based on the previous work of the individual; {ORC §4141.312(A)}
           
        2. The pension, retirement, or annuity payment is made under a plan maintained or contributed to by a base period or chargeable employer. {ORC §4141.312 (A)(1)} See Nally v. ODJFS (Aug. 5, 2005), Athens CP No. 04CI366, unreported (holding that this requirement is not met when an employer merely withholds and forwards a portion of an employee's pay to a union-maintained pension).
           
        3. Services performed by the individual affect eligibility for, or increase the amount of, the pension, retirement, or annuity payment. {ORC 4141.312(A)(2)} See Williams v. Bowland (Feb. 6, 1996), Montgomery CP No. 95-2873, unreported (holding that a claimant's pension is increased if the employer's payments into an annuity increase the amount claimant will receive at age 65, even though the payments do not increase claimant's current monthly payments).
           
    2. Pension, retirement, or annuity payments will NOT be deemed to have been received by the individual with respect to a week if the Director finds that: {OAC 4141-30-12(B)}
       
      1. The individual had the right to defer receipt of the payments;
         
      2. The individual did not receive the payments with respect to the week claimed; AND
         
      3. The individual elected, within sixty days of the initial distribution, to transfer or roll over the entire payment to an individual retirement account, an individual retirement annuity, or a qualified plan as defined by the IRS.
         
      4. Ohio Administrative Code 4141-30-12(B) has been upheld on appeal. Ohio Bell Telephone Co. v. OBES, 1998 Ohio App. LEXIS 5078.
         
    3. Social Security and Railroad Retirement. Payments under the Social Security Act or the Railroad Retirement Act of 1974 are deductible IF a base period employer paid into the plan even if the employer's payments do not affect the individual's eligibility or increase the amount of the payment received by the individual.
       
      1. The payments must be based on the previous work of the individual; {ORC §4141.312(A)}
         
      2. Social Security Disability payments are also deductible. Rivers v. Administrator (Oct. 24, 1986), Summit C.P. No. CV85-2-0384, unreported.
         
    4. Examples
       
      1. Deductible pension, retirement, or annuity payments would include:
         
        1. state and local government retirement programs; federal civil service, or disability, pensions; private for-profit employer pensions; military retirement; disability retirement pensions; self-employed Keough plans; individual retirement accounts.
           
        2. The Review Commission has held that 401(k) plans are to be treated as pension plans under Ohio Revised Code Section 4141.312.
           
      2. Deductible pension, retirement, or annuity payments would NOT include:
         
        1. Old Age Survivor's Insurance; Black lung benefits, and other temporary disability insurance and workers' compensation.
           
        2. A disability pension paid to a former member of the U.S. Armed Forces which is based on the nature and extent of the disability rather than a prior period of employment or service. {ORC § 4141.312(B)}
           
          1. The individual should present a copy of the award to the Director.
             
          2. Under the ODJFS Policy Guide, if the individual qualifies for retirement based on years of service or age, in addition to disability, the total amount of the combined retirement and disability benefits is deductible.
             
    5. Federal law allows each state to limit the deductibility of pensions by reducing or eliminating the deduction for the portion of the pension which the individual contributed. However, the General Assembly has not so acted, and there is no such limit on the deductibility of pensions in Ohio. Gleason v. OBES (1985), 17 Ohio St.3d 107.
       

    E.  Separation or Termination Pay

    1. Benefits otherwise payable for any week shall be reduced by the amount of separation or termination pay, paid to an individual at the time of separation from employment, which a claimant receives with respect to that week. {ORC §4141.31(A)(4)}  
       
    2. Payments made to employees in return for their agreeing to a separation from employment shall be deemed to be separation pay, and shall be deductible under Ohio Revised Code Section 4141.31(A)(4). {OAC 4141-30-01} See >Stoll v.Owens Brockway Glass Container, Inc., 2002 Ohio App. LEXIS 3913.
       
      1. Buy-out plans
         
        1. If the payment consists of both vested pension and an additional enhancement amount, the enhancement amount is separation pay.
           
        2. If the payment consists of no vested pension, and is simply an enhancement amount, the entire payment is separation pay. In re Erb, B94-00985.
           
      2. Agreements not to sue. The Review Commission generally views a standard agreement not to sue an employer as an agreement to a separation, and any payment conditioned on signing that agreement is still deductible separation pay. Where the individual already has pending legal action against the employer, the Review Commission is more likely to view the conditioned payment as non-deductible settlement pay.
         
    3. Benefits otherwise payable for any week shall NOT be reduced by the amount of voluntary separation incentive payments, or special separation pay, which a claimant receives under the National Defense Authorization Act for Fiscal Years 1992 and 1993. {ORC §4141.31(D)}
       
    4. Benefits otherwise payable for any week shall NOT be reduced by the amount of private unemployment benefits which a claimant receives with respect to that week. {ORC §4141.36}. A copy of such private unemployment benefit plan, as well as a copy of the authorizing ruling by the IRS, must be submitted to the Director. {OAC 4141-36-01}
       
    5. Allocation {ORC §4141.31(A)(5)}
       
      1. Unless there is a provision in the labor-management agreement, or in the employer's policy, which limits or prevents allocation of separation or termination pay, the employer may allocate that pay.
         
      2. If the employer has the right to allocate separation or termination pay, but does not do so, the Director or Review Commission shall allocate the pay:
         
      1. in an amount equal to the individual's average weekly wage;
         
      2. to the first and each succeeding week following the separation from employment until the payment is exhausted.

    F.  Vacation Pay

    1. Benefits otherwise payable for any week shall be reduced by the amount of vacation pay which a claimant receives with respect to that week. {ORC §4141.31(A)(5)}
       
    2. Allocation {ORC §4141.31(A)(5)}
       
      1. Unless there is a provision in the labor-management agreement, or in the employer's policy, which limits or prevents allocation of vacation pay, the employer may allocate that pay.
         
      2. If the employer has the right to allocate vacation pay, but does not do so, the Director or Review Commission shall allocate the pay:
         
        1. in an amount equal to the individual's average weekly wage;
           
        2. to the first and each succeeding week following the separation from employment until the payment is exhausted.
           
      3. Review Commission policy provides that the existence of a provision in the labor-management agreement, or in the employer's policy, providing that accumulated or unused vacation pay must be paid in a lump sum does NOT prevent that pay from being allocated by either the employer, Director, or Review Commission.
         
      4. Review Commission policy states that the fact that public employees earn vacation pay in statutorily controlled increments does NOT prevent that pay from being allocated by either the employer, Director, or Review Commission.
         
      5. Vacation shutdowns
         
        1. Where a labor-management agreement specifically gives the employer the right to allocate a number of weeks of vacation pay to an annual plant shutdown, the employer may allocate that pay. Wynk v. Board of Review (Dec. 30, 1993), Mercer CP No. 90-CIV-135, unreported.
           
        2. Where an employer lays off employees due to a lack of work, and follows the labor-management agreement by paying off all unused vacation pay at the time of the layoff, the employer may allocate that pay ONLY to the individual's previously selected vacation period. Akzo Salt v. Administrator (1995), 107 Ohio App.3d 567; Brown v. Cargill (Feb. 12, 1999) Montgomery CP No. 98-1141, unreported.

    G.  Computation Rules

    1. Monthly payments. If a monthly payment is received, then the amount of the remuneration deemed to be received in a week shall be computed by multiplying the monthly amount by twelve and dividing the product by fifty-two. {ORC §4141.31(A)(5)}
       
    2. Rounding. If benefits for any week, when reduced, result in an amount not a multiple of one dollar, such benefits shall be rounded to the next lower multiple of one dollar. {ORC §4141.31(A)(5)}
       
    3. Concurrent deductions. Each of the above types of deductible income is treated separately under Ohio Revised Code Section 4141.31. Accordingly, more than one type of deductible income can be allocated to the same week. Deductible income will NOT be allocated by the Director or Review Commission so that one type is totally exhausted before beginning to allocate another type.
    nt, during the week of an otherwise valid weekly claim, benefits are payable to that partially unemployed individual. The benefits will be paid in an amount equal to the individual's weekly benefit amount minus the amount of earnings in excess of 20% of the individual's weekly benefit amount, rounded to the next lower multiple of one dollar. {ORC §4141.30(C)}
     
  2. Holiday pay
     
    1. Holiday pay will be applied to the week during which the holiday occurs, regardless of when the pay is actually received UNLESS there is a labor-management agreement which specifies the date on which the holiday is to be observed. {OAC 4141-9-05(A)}
       
    2. Holiday pay is deductible, subject to the 20% exclusion, under Ohio Revised Code Section 4141.30(C). {OAC 4141-9-05(B)}
       
  3. An award of back pay is considered earnings. An overpayment order should be issued if unemployment compensation benefits were paid during the period covered by the award, even if the employer withholds what would ordinarily be paid as unemployment benefits.

B.  Remuneration in Lieu of Notice

  1. Benefits otherwise payable for any week shall be reduced by the amount of remuneration in lieu of notice which a claimant receives with respect to that week. {ORC §4141.31(A)(1)}
     
  2. Remuneration in lieu of notice is a continuation of wages for a designated period after termination of employment. It constitutes wages, is subject to contributions, and may be allocated. {OAC 4141-9-08}
     
  3. Worker Adjustment and Retraining Notification Act (WARN) payments constitute remuneration in lieu of notice. Fegatelli v. Ohio Bureau of Employment Services (2001), 146 Ohio App.3d 275.
     
  4. Allocation {ORC §4141.31(A)(5)}
     
    1. Unless there is a provision in the labor-management agreement, or in the employer's policy, which limits or prevents allocation of remuneration in lieu of notice, the employer may allocate that remuneration.
       
    2. If the employer has the right to allocate remuneration in lieu of notice, but does not do so, the Director or Review Commission shall allocate the remuneration:
       
      1. in an amount equal to the individual's average weekly wage;
         
      2. to the first and each succeeding week following the separation from employment until the payment is exhausted.

C.  Workers' Compensation

  1. Benefits otherwise payable for any week shall be reduced by the amount of wage loss entitlement under workers' compensation which a claimant receives with respect to that week. {ORC §4141.31(A)(2)}
     
  2. Wage loss entitlement
     
    1. Can be payable under Ohio workers' compensation law to an individual who returns to employment in a position other than the individual's former position, or is unable to find work consistent with the individual's physical capabilities. {ORC §4123.56(B)}
       
    2. Occasionally, the Bureau of Workers' Compensation deducts unemployment compensation benefits from an individual's wage loss entitlement at the same time that ODJFS deducts wage loss entitlement from the individual's unemployment compensation benefits. Nevertheless, under Ohio Revised Code Section 4141.31(A)(2), the Review Commission will affirm any overpayment order resulting from ODJFS deducting wage loss entitlement from unemployment compensation benefits. The workers' compensation law does not have a corresponding provision.
       
  3. When an individual is awarded temporary total disability for a period for which he has already received unemployment compensation benefits, the Bureau of Workers' Compensation shall reimburse ODJFS, and ODJFS will credit the account of the employer(s) that was charged. {ORC §4123.56(A)}
     
  4. A workers' compensation benefits award is based on a conclusion that the individual is unable to work in the individual's previous occupation. State ex rel Ramirez v. Industrial Commission (1982), 69 Ohio St.2d 630. Accordingly, an individual can receive workers' compensation benefits and still be physically able to work under Ohio Revised Code Section 4141.29(A)(4)(a).
     

D.  Pension, Retirement, and Annuity Plan Payments

  1. Benefits otherwise payable for any week shall be reduced by the amount which a claimant receives as: {ORC §§4141.31(A)(3) and 4141.312(A)}
     
    1. Governmental or other pension; OR
       
    2. Retirement or retired pay; OR
       
    3. Annuity or other similar periodic payment.
       
    4. Benefits shall be reduced by the amount reasonably attributable to the week claimed IF all of the following apply:
       
      1. The pension, retirement, or annuity payment is based on the previous work of the individual; {ORC §4141.312(A)}
         
      2. The pension, retirement, or annuity payment is made under a plan maintained or contributed to by a base period or chargeable employer. {ORC §4141.312 (A)(1)} See Nally v. ODJFS (Aug. 5, 2005), Athens CP No. 04CI366, unreported (holding that this requirement is not met when an employer merely withholds and forwards a portion of an employee's pay to a union-maintained pension).
         
      3. Services performed by the individual affect eligibility for, or increase the amount of, the pension, retirement, or annuity payment. {ORC 4141.312(A)(2)} See Williams v. Bowland (Feb. 6, 1996), Montgomery CP No. 95-2873, unreported (holding that a claimant's pension is increased if the employer's payments into an annuity increase the amount claimant will receive at age 65, even though the payments do not increase claimant's current monthly payments).
         
  2. Pension, retirement, or annuity payments will NOT be deemed to have been received by the individual with respect to a week if the Director finds that: {OAC 4141-30-12(B)}
     
    1. The individual had the right to defer receipt of the payments;
       
    2. The individual did not receive the payments with respect to the week claimed; AND
       
    3. The individual elected, within sixty days of the initial distribution, to transfer or roll over the entire payment to an individual retirement account, an individual retirement annuity, or a qualified plan as defined by the IRS.
       
    4. Ohio Administrative Code 4141-30-12(B) has been upheld on appeal. Ohio Bell Telephone Co. v. OBES, 1998 Ohio App. LEXIS 5078.
       
  3. Social Security and Railroad Retirement. Payments under the Social Security Act or the Railroad Retirement Act of 1974 are deductible IF a base period employer paid into the plan even if the employer's payments do not affect the individual's eligibility or increase the amount of the payment received by the individual.
     
    1. The payments must be based on the previous work of the individual; {ORC §4141.312(A)}
       
    2. Social Security Disability payments are also deductible. Rivers v. Administrator (Oct. 24, 1986), Summit C.P. No. CV85-2-0384, unreported.
       
  4. Examples
     
    1. Deductible pension, retirement, or annuity payments would include:
       
      1. state and local government retirement programs; federal civil service, or disability, pensions; private for-profit employer pensions; military retirement; disability retirement pensions; self-employed Keough plans; individual retirement accounts.
         
      2. The Review Commission has held that 401(k) plans are to be treated as pension plans under Ohio Revised Code Section 4141.312.
         
    2. Deductible pension, retirement, or annuity payments would NOT include:
       
      1. Old Age Survivor's Insurance; Black lung benefits, and other temporary disability insurance and workers' compensation.
         
      2. A disability pension paid to a former member of the U.S. Armed Forces which is based on the nature and extent of the disability rather than a prior period of employment or service. {ORC § 4141.312(B)}
         
        1. The individual should present a copy of the award to the Director.
           
        2. Under the ODJFS Policy Guide, if the individual qualifies for retirement based on years of service or age, in addition to disability, the total amount of the combined retirement and disability benefits is deductible.
           
  5. Federal law allows each state to limit the deductibility of pensions by reducing or eliminating the deduction for the portion of the pension which the individual contributed. However, the General Assembly has not so acted, and there is no such limit on the deductibility of pensions in Ohio. Gleason v. OBES (1985), 17 Ohio St.3d 107.
     

E.  Separation or Termination Pay

  1. Benefits otherwise payable for any week shall be reduced by the amount of separation or termination pay, paid to an individual at the time of separation from employment, which a claimant receives with respect to that week. {ORC §4141.31(A)(4)}  
     
  2. Payments made to employees in return for their agreeing to a separation from employment shall be deemed to be separation pay, and shall be deductible under Ohio Revised Code Section 4141.31(A)(4). {OAC 4141-30-01} See >Stoll v.Owens Brockway Glass Container, Inc., 2002 Ohio App. LEXIS 3913.
     
    1. Buy-out plans
       
      1. If the payment consists of both vested pension and an additional enhancement amount, the enhancement amount is separation pay.
         
      2. If the payment consists of no vested pension, and is simply an enhancement amount, the entire payment is separation pay. In re Erb, B94-00985.
         
    2. Agreements not to sue. The Review Commission generally views a standard agreement not to sue an employer as an agreement to a separation, and any payment conditioned on signing that agreement is still deductible separation pay. Where the individual already has pending legal action against the employer, the Review Commission is more likely to view the conditioned payment as non-deductible settlement pay.
       
  3. Benefits otherwise payable for any week shall NOT be reduced by the amount of voluntary separation incentive payments, or special separation pay, which a claimant receives under the National Defense Authorization Act for Fiscal Years 1992 and 1993. {ORC §4141.31(D)}
     
  4. Benefits otherwise payable for any week shall NOT be reduced by the amount of private unemployment benefits which a claimant receives with respect to that week. {ORC §4141.36}. A copy of such private unemployment benefit plan, as well as a copy of the authorizing ruling by the IRS, must be submitted to the Director. {OAC 4141-36-01}
     
  5. Allocation {ORC §4141.31(A)(5)}
     
    1. Unless there is a provision in the labor-management agreement, or in the employer's policy, which limits or prevents allocation of separation or termination pay, the employer may allocate that pay.
       
    2. If the employer has the right to allocate separation or termination pay, but does not do so, the Director or Review Commission shall allocate the pay:
       
    1. in an amount equal to the individual's average weekly wage;
       
    2. to the first and each succeeding week following the separation from employment until the payment is exhausted.

F.  Vacation Pay

  1. Benefits otherwise payable for any week shall be reduced by the amount of vacation pay which a claimant receives with respect to that week. {ORC §4141.31(A)(5)}
     
  2. Allocation {ORC §4141.31(A)(5)}
     
    1. Unless there is a provision in the labor-management agreement, or in the employer's policy, which limits or prevents allocation of vacation pay, the employer may allocate that pay.
       
    2. If the employer has the right to allocate vacation pay, but does not do so, the Director or Review Commission shall allocate the pay:
       
      1. in an amount equal to the individual's average weekly wage;
         
      2. to the first and each succeeding week following the separation from employment until the payment is exhausted.
         
    3. Review Commission policy provides that the existence of a provision in the labor-management agreement, or in the employer's policy, providing that accumulated or unused vacation pay must be paid in a lump sum does NOT prevent that pay from being allocated by either the employer, Director, or Review Commission.
       
    4. Review Commission policy states that the fact that public employees earn vacation pay in statutorily controlled increments does NOT prevent that pay from being allocated by either the employer, Director, or Review Commission.
       
    5. Vacation shutdowns
       
      1. Where a labor-management agreement specifically gives the employer the right to allocate a number of weeks of vacation pay to an annual plant shutdown, the employer may allocate that pay. Wynk v. Board of Review (Dec. 30, 1993), Mercer CP No. 90-CIV-135, unreported.
         
      2. Where an employer lays off employees due to a lack of work, and follows the labor-management agreement by paying off all unused vacation pay at the time of the layoff, the employer may allocate that pay ONLY to the individual's previously selected vacation period. Akzo Salt v. Administrator (1995), 107 Ohio App.3d 567; Brown v. Cargill (Feb. 12, 1999) Montgomery CP No. 98-1141, unreported.

G.  Computation Rules

  1. Monthly payments. If a monthly payment is received, then the amount of the remuneration deemed to be received in a week shall be computed by multiplying the monthly amount by twelve and dividing the product by fifty-two. {ORC §4141.31(A)(5)}
     
  2. Rounding. If benefits for any week, when reduced, result in an amount not a multiple of one dollar, such benefits shall be rounded to the next lower multiple of one dollar. {ORC §4141.31(A)(5)}
     
  3. Concurrent deductions. Each of the above types of deductible income is treated separately under Ohio Revised Code Section 4141.31. Accordingly, more than one type of deductible income can be allocated to the same week. Deductible income will NOT be allocated by the Director or Review Commission so that one type is totally exhausted before beginning to allocate another type.