Why am I financially ineligible for UC benefits under the 49.5% rule?
Before an individual is able to collect unemployment compensation benefits (“UC Benefits”), he/she must be financially eligible. Some individuals receive their Notice of Financial Determination stating that he/she is ineligible for UC Benefits because he/she did not make at least 49.5% of qualifying wages outside the calendar quarter in which he/she had the highest wages. This is known as the 49.5% rule. What does it mean?
The 49.5% rule can be quite confusing. When a financial determination is being made, the Pennsylvania Department of Labor and Industry (“State”) will look at an individual’s base year earnings to determine whether or not he/she earned enough money to be eligible for UC Benefits.
What are base year earnings?
An individual’s base year earnings are the earnings made in the first four of the last five completed calendar quarters preceding the individual’s application date for UC Benefits. An individual’s base year is broken down into four (4) quarters:
1. January, February and March makes up the first quarter;
2. April, May and June makes up the second quarter;
3. July, August and September makes up the third quarter; and
4. October, November and December make up the fourth quarter.
Therefore, for example, if an individual files in February of 2015. The individual would have filed in the first quarter of 2015. The State will look at the individual’s first four quarters of the previous five quarters to determine the individual’s base year earnings. Therefore, since the individual filed in February 2015, the State will not consider any earnings for the fourth quarter of 2014 (October, November or December). The State will look at the individual’s earnings for the following quarters:
1. The fourth quarter (October, November and December) of 2013;
2. The first quarter (January, February and March) of 2014;
3. The second quarter (April, May and June) of 2014; and
4. The third quarter (July, August and September) of 2014.
These are the quarters that the State will use for determining the individual’s base year earnings.
What does a 49.5% disqualification mean?
If you are financially ineligible because of the 49.5% rule, that means that you did not earn at least 49.5% of your qualifying wages outside the calendar quarter in which he/she had the highest wages. In other words, you made too much money in one quarter and not enough in the other three quarters.
For example, let’s say you earned the following in each quarter:
1. First Quarter – $10,000;
2. Second Quarter – $10,000;
3. Third Quarter – $10,000; and
4. Fourth Quarter – $50,000.
The individual’s total base year earnings would be $80,000. The fourth quarter was the individual’s highest quarter. Under the 49.5% rule, the individual must have earned at least $39,600 ($80,000 multiplied by 49.5%) in the other three quarters (combined) to be financially eligible. In this scenario, the individual did not earn $39,600 in the other three quarters (combined). The individual only earned $30,000 total. This means the individual has NOT satisfied the 49.5% rule and will be found financially INELIGIBLE for UC Benefits.