Section 1277 of the UI Code prevents an individual from establishing valid claims in two successive benefit years without having reestablished an attachment to the labor market subsequent to the effective date of the first claim.
The “lag period” is the space of time between the end of the base period of the claim and the effective date of the claim itself. Earnings during the lag period are not used in computing the award of the claim. Whenever these “lag period” wages appear in the base period of a subsequent claim, the 1277 test applies.
In enacting Section 1277, the Legislature placed a “test” upon the claimant’s attachment to the labor market before a second claim could be established on “lag period” wages. The test consists of both an earnings and work requirement.
The Earnings Requirement
Section 1277(b) requires that the claimant have had, during the old benefit year, sufficient wages of the type required to establish a claim. This requirement means that, for claims established after January 1, 1992, the claimant must have been:
- Paid wages for employment of not less that $1300 during the “high quarter” of the base period of the new claim, or
- Paid wages for employment of not less than $900 in the “high quarter” of the new claim, and have earnings of 1.25 times those “high quarter” earnings in the base period of the new claim. (Example: If “high quarter” earnings are $900, the claimant must have total base period earnings of at least $1125. If “high quarter” earnings are $1200, the total base period earnings required are at least $1500., etc.)
While only earnings in covered employment may be used to establish an award, any and all compensation as an employee may be used to satisfy the earnings requirement for clearing the lag period test of Section 1277. This includes compensation from nonsubject employment, out-of-state employment, and where there is elective coverage, earnings in self-employment. It also includes fees for performance as a juror or court summoned witness, in lieu of notice pay, as well as any vacation pay, backpay, sick leave pay or holiday pay which is not excluded from the definition of Wages in Section 1265.5.
Compensation for any military service, whether on an active duty basis or a member of the reserves, constitutes employment. Therefore, it can be used to satisfy both the earnings test and the “some work” test as described below.
The “Some Work” Requirement
The “some work” requirement is in addition to the earnings requirement described above. This requirement guarantees that the claimant has shown some attachment to a labor market during his old benefit year.
“Some work” is defined in Section 1277-2 of Title 22 as follows:
“Work” means services performed by a person for remuneration under a bona fide contract with and payable by another person, including any employing unit, and includes services performed for income or earnings in self-employment, or as an employee as defined in Section 621 of the Code, or as an independent contractor for a principal or as an employee under the usual common law or admiralty rules regardless of whether the services are in employment under the Code.”
Thus, if an individual has performed any personal service as an employee or self-employed individual during the test period for which he received remuneration in any amount, the second condition for clearing the lag test is satisfied.
For example, in P-B-156, the claimant received sufficient residual wages during the test period to meet the earnings requirement of Section 1277. Although he had not worked in an employer-employee relationship during the 52 weeks following the effective date of his prior claim, he had earnings from self-employment during this period. In ruling that the claim was valid under Section 1277, the Board said:
“. . . The Department’s regulation 1277-2 which was adopted to implement and interpret the “work” requirement of Section 1277 included self-employment. We believe this was a correct interpretation and . . . hold “self-employment” does satisfy the “some work” requirement of Section 1277.”
In some cases, the claimant may receive remuneration for a period during which he actually did not work, such as standby, idle-time, backpay, or show-up pay. Such compensation satisfies the requirement for performing “some work” since the claimant was hired to hold himself in readiness to perform services. His time is thus in service of another, even though he is inactive.
On the other hand, the receipt of sick leave, vacation pay, or in lieu-of-notice pay does not satisfy the “some work” requirement for clearing the lag test. While these payments may constitute wages under Section 1252 or lag period earnings for satisfying the first condition of the 1277 test, they do not satisfy the requirement for performing “some work,” since they do not constitute remuneration for performance of a service.
Using Disability Insurance or Workers’ Compensation
Disability Insurance (DI) and Workers’ Compensation (WC) payments, including benefits paid in or through another state or by the federal government, may be used to satisfy the requirements of Section 1277 under either of the following conditions:
- If the claimant was not paid any benefits on the prior claim, and was disabled and entitled to receive either DI or WC to compensate for wage loss, the claimant may use the amount of DI or WC paid to satisfy the earnings requirement; or
- If the claimant was paid benefits on the prior claim and has satisfied the “some work” requirement, the claimant may use twice the dollar amount of the DI or WC payments to meet the earnings requirement.
NOTE: DI and WC payments are not usable as “wages” to determine the award on the claim, they are usable only for the specific purpose of validating earnings from the lag period.