State employees in Pennsylvania longer will no be able to take advantage of a lucrative loophole in the state’s unemployment law.
Before it was closed this week, the loophole allowed for a process called “triple-dipping,” in which a state employee would retire from his job and begin collecting pension benefits, then would be hired back on a part-time basis and also would collect unemployment compensation after leaving that job.
The state House and state Senate voted unanimously this week to end the process by changing the unemployment compensation law. Gov. Tom Corbett (R) signed the bill into law on Wednesday.
“Pennsylvania taxpayers cannot afford and will not accept this gluttony of benefits,” said state Rep. C. Adam Harris (R-Juniata,) who sponsored HB 421.
‘A Blatant Fraud’
He said triple-dipping was “a blatant fraud,” because the unemployment compensation fund is supposed to be used as a safety net, not as an extra paycheck for someone who left their job in order to start collecting pension benefits or to start working part-time.
State law does not allow those part-time workers to be on the state payroll for more than 95 days each year, but they can still make a pretty penny during that time.
And since the term of employment is predetermined, the state’s unemployment system considers the leave involuntary. That’s how the employee could become eligible for unemployment compensation, on top of their pension benefits and temporary salary, before the changes approved this week.
State Sen. Pat Vance (R-Cumberland), who has been pressing the issue for a while, said 638 former state workers who now hold part-time state jobs collected more than $2.7 million in unemployment compensation during the past three years.
The Department of Labor and Industry estimates that closing the loophole will save the state about $1 million annually.
For the sake of comparison, the unemployment system has paid out about $3 billion each of the past two years.
The bill was one of several signed by Corbett on Wednesday.
“The governor feels that it is important that individuals who receive unemployment benefits do so in lawful manner and this bill ensures that,” said Jay Pagni, Corbett’s spokesperson.
But while the triple-dipping loophole is now closed, the changes do not prevent double-dipping, which is what happens when a state employee retires, begins collecting pension benefits and then comes back to work on a part-time basis.
A PA Independent investigation found that Joe Conti, the former CEO of the Pennsylvania Liquor Control Board, has made more than $67,000 for part-time work this year while also drawing a $60,000 annual pension. Conti officially retired from the PLCB in January but was hired back a month later at $80 per hour.