The Pennsylvania Unemployment Compensation Law includes provisions for reducing your unemployment benefits under certain circumstances. Understanding what these circumstances are does not always allow you to do anything about it, but it will help you prepare for any reduction in your income. This is especially important if you are a long-term unemployed worker and have extra financial responsibilities such as a mortgage. This series of article will discuss three of the main reasons the PA Labor and Industry Department could (legally) reduce your weekly benefits.

Low Balance in the Unemployment Compensation Trust

The Pennsylvania UC Law section 404e 4(ii) allows the Labor and Industry Department to reduce benefits when the state Unemployment Compensation Trust Fund is low. Since January 2, 2010, the Labor and Industry department have reduced the benefits of unemployed workers by 2.3 percent due to the increase in unemployed workers and the reduction in contributions toward the fund. This reduction is foreseen to continue during the rest of 2011.

There are certain points you may want to consider if you are affected by this reduction.

First, the benefit reduction amount will be rounded up to the next dollar. This is not going to break the bank, but its nice to know where your money is going, even if it’s only pennies.

Second, this reduction of 2.3 percent applies to your basic unemployment benefits and your dependents allowance.

Third, the reduction of benefits is applied to the final payable amount, once earnings, vacation, pensions and holidays have been deducted. However, it is deducted before any pending federal tax, child support or overpayment offsets are deducted.

If you would like more information on the law that permits this reduction click here.

Child Support Reduction

Another possible source of unemployment benefit reduction is child support. If you are responsible for paying child support the DRS, or Domestic Relations Section will inform the PA Labor and Industry department and request the reduction of child support from your UC benefits.

The process is as follows. The DRS will notify the PA UC agency of your financial responsibilities and provide an amount or percentage that must be deducted from your payments. For instance, the DRS may request a $75 or 50 percent deduction of your benefits. This means $75 or 50 percent of your benefits, whichever is less, will be taken away from your wages and sent directly to the DRS handling your children’s case.

If you opted to deduct the Federal Tax from your benefits automatically, the percentage amount of your deduction will be taken from your gross amount, before the tax has been deducted.

Our next article will discus the third main reason why the PA Labor and Industry department applies reductions from unemployment benefits.

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