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House of Representatives
Session of 2021 - 2022 Regular Session


Posted: February 16, 2021 03:31 PM
From: Representative Ryan Warner
To: All House members
Subject: Leveling the Playing Field for Small Business Owners to Receive Unemployment Benefits
I plan to reintroduce former House Bill 1582 from the 2015-16 legislative session, which would amend the Unemployment Compensation (UC) 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 has a profound impact to small business owners across the Commonwealth.

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. 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.
During the course of the pandemic, my office and many of yours heard from corporate officers who paid into UC but were temporarily unemployed – through no fault or failure of their own - due to shutdowns from COVID-19 and other business restrictions.  Thankfully, many of these individuals were eligible for the new federal Pandemic Unemployment Program, however when this program ends these small business owners will once again be denied these benefits.

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


Introduced as HB597