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Pennsylvania House of Representatives
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House Co-Sponsorship Memoranda

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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: February 1, 2017 10:21 AM
From: Representative David R. Millard
To: All House members
Subject: Legislation Leveling the Playing Field for Small Business Owners to Receive Unemployment Benefits
I plan to reintroduce former House Bill 1582 in the near future, which would amend the Unemployment Compensation Law to allow corporate officers to collect unemployment compensation benefits if they become unemployed. The wages of corporate officers are subject to unemployment taxes, yet corporate officers are not, in general, eligible for unemployment compensation benefits. As many of you are aware, this “Catch 22” in the law is often complained about by affected businessmen.

Unfortunately, the reason this dilemma exists is due to requirements of the Federal Unemployment Tax Act (FUTA). FUTA, which is part of the Internal Revenue Code (Section 3301 et. seq.), requires that that corporate officers pay unemployment taxes; obviously we cannot change this tax requirement at the state level. Generally speaking, corporate officers are not eligible to receive unemployment compensation under Pennsylvania law (except in limited occasions, such as involuntary bankruptcy). In order to improve the fairness of the law, with respect to corporate officers, my legislation proposes to allow corporate officers to be generally eligible for benefits.

It is important to note that my legislation does make corporate officers ineligible for benefits if they sold their business or voluntarily terminated its operations. I believe my legislation offers a degree of fairness to the system for corporate officers. Please join me in cosponsoring this important piece of legislation.

Introduced as HB630