Collecting Umployment on Seperation Pay

You are eligible for unemployment, but the amount is reduced

You will be eligible for unemployment, whether or not your employer pays severance, so long as you are laid off due to poor economic conditions.

However, unemployment is calculated on a weekly basis, and reduced by amounts that you receive as pay from other sources. So, each week that you receive some compensation from some other source, the amount of your unemployment compensation is reduced dollar for dollar by the amount that you receive as pay.

Severance amounts paid as wage continuation (that is, as ongoing paychecks) are treated as pay and will reduce the amount of your unemployment compensation. If the severance amount is greater than your unemployment amount, you will receive nothing from unemployment during the severance eligibility period.

Most companies now require a severance agreement that releases them from potential suit in exchange for severance pay. Whether that is a good deal for you or not depends on whether you have any valid claims to assert against the company. If you do not, then you are not giving up something of value. To find out whether you have potential claims, however, you should consult an attorney. It is also a good idea to have an attorney review any severance agreement.

Best regards,

Neil Klingshirn

posted by Neil Klingshirn  |  Feb 13, 2009 1:08 PM [EST]