The Commonwealth Court of Pennsylvania recently held that employees on strike were entitled to unemployment compensation (“UC”) benefits for the duration of their work stoppage because their employer had taken steps not expressly authorized by the applicable (though expired) collective bargaining agreement (“CBA”) and plan documents. ATI Flat Rolled Prods. LLC v. UCBR, 332 A.3d 901 (Pa. Cmwlth. 2025).

Under Section 402(d) of the Unemployment Compensation Act, eligibility for UC benefits depends on whether a work stoppage resulted from an employer-forced lockout or from a different type of labor dispute, such as a strike. In determining whether a work stoppage results from a lockout, Pennsylvania courts consider whether the employees have offered to continue working for a reasonable time under pre-existing terms and conditions, and whether the employer agreed to permit work to continue under pre-existing terms and conditions. If the employer does not offer to permit work to continue under pre-existing terms and conditions, the employer has failed to maintain the status quo, and the result is a conversion of a voluntary strike to a lockout whereby the employees may be eligible for UC benefits. In determining the status quo, Pennsylvania courts look only to the pre-existing terms and conditions of employment embodied in the expired agreement and do not consider the previous conduct of the parties.

In ATI Flat Rolled Prods. LLC, the employer refused to allow striking employees to take loans against their 401(k) retirement accounts, arguing that the company had a consistent past practice of denying plan loans to employees in an unpaid status. Therefore, the employer contended, its refusal of plan loans to striking employees did not constitute a change in the status quo giving rise to a lockout.

However, the Court noted that the relevant plan document and CBA stated only that employees who had retired or were terminated were ineligible for plan loans. The Court found no memorialized agreement between the employer and union to permit the denial of plan loans to all employees in an unpaid status. Because the Court determined the employer had changed the status quo by denying plan loans to the striking employees, the Court held the employees were eligible for UC benefits under Section 402(d) of the UC Law.

This case serves as a reminder that an employer’s misstep during a labor dispute can result in striking employees becoming eligible for UC benefits, which can impact the parties’ relative bargaining positions.