Collecting Umployment on Seperation Pay

My company is laying off 8000 employees and is offering a Seperation Plan that pays out 2 weeks for every year plus 8 weeks and any vacation. This is not a lump sum payment so every 2 weeks employees will receive a check until their weeks of eligiablity expire. They will also receive their medical benefits until the last payout check. I understand that you are eligable for unemployment compensation but can you receive this compensation while you are still receiving what they call Seperation Pay? We also need to sign an agreement that we will not sue.

1 answer  |  asked Feb 13, 2009 09:46 AM [EST]  |  applies to Ohio

Answers (1)

Neil Klingshirn
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]

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