Severance Package and Unemployment Benefits

[G-Man]

If you receive a severance package from your employer (i.e., 12 months' severance pay), can you still apply for unemployment benefits?

 

[RetiredAndLovingIt]

I did in California.

 

[CincyDave]

My guess is that you cannot while you are getting severance, but when severance runs out you could apply. I'm no expert. Check with your state unemployment dept.

 

[Jerry1]

It didn’t seem okay in Michigan. There was some who did apply, but I didn’t bother given how I interpreted the rules.

 

[GenXguy]

It depends on the state. In Illinois, you can receive severance and unemployment compensation both without it affecting your benefit.

Looks like that is not the case in NC.

 

[Figaro]

Yes you qualify. It was involuntary...you're entitled nto the unemployment benefits. Happened to me a few years back. Be sure to apply quick.

It's trivial amount each week, but keeps the lights on and groceries paid. A tad more if you have dependents.

 

[bada bing]

My employer designated me "involuntarily severed", which made me eligible for unemployment insurance. That was part of the negotiations for my package. It was a bit bigger deal than it normally would have been because the pandemic federal kicker and extension was in effect. I severed in Oct 2020, three years ago.

Short answer is it depends on how your severance status is designated. My understanding is that if you are "voluntarily severed", that makes you ineligible.

 

[Aerides]

If you receive a severance package from your employer (i.e., 12 months' severance pay), can you still apply for unemployment benefits?

Depends on the state. In Florida you cannot, unless your severance is pretty short. Unemployment applies only up until 6 months from your termination date, and only for the portion not covered by severance. So, if you got 3 months severance, after that you'd be eligible for 3 more months of unemployment. No double dip, no getting after severance runs out if that's at least 6 months.

Check your state unemployment laws.

 

[Drake3287]

Yep, in California you can.

 

[youbet]

It depends on the state. In Illinois, you can receive severance and unemployment compensation both without it affecting your benefit.

Yes in Illinois. Did that.

 

[ccjarider]

In Oregon, no one even asked if I was receiving any severance or separation package.

9 months severance concurrent with 6 months unemployment. Made more in those 6 months not working ( Stupid policy - I know)

 

[G-Man]

What would be the steps to verify if I qualify for unemployment benefits?

FYI. This is what I found on my state's Employment Commission website:

 

[big-papa]

Received several severance packages over the years, but all were lump sum. Applied for and received unemployment with no issues.

Cheers.

 

[Dtail]

We were told that we couldn't apply for unemployment while receiving severance which was paid out monthly, but we did apply and received unemployment. This is in New Jersey.

 

[DJRR]

In VA I was always told to apply and they will determine your eligibility. They can make distinctions for vacation payouts, notice period payouts, circumstances of separation, severance, etc. I usually got retroactive payments to my date of separation regardless of my deal with the employer. It is an insurance plan paid for by you, through your employer, and I would take full advantage of it.

 

[G-Man]

In VA I was always told to apply and they will determine your eligibility. They can make distinctions for vacation payouts, notice period payouts, circumstances of separation, severance, etc. I usually got retroactive payments to my date of separation regardless of my deal with the employer. It is an insurance plan paid for by you, through your employer, and I would take full advantage of it.

Please tell me more. Did you receive severance pay over a period of time or a lump sum? Anytime special is VA that you had to do when filing for unemployment benefits?

 

[mystang52]

We were told that we couldn't apply for unemployment while receiving severance which was paid out monthly, but we did apply and received unemployment. This is in New Jersey.

I got a severance, and simultaneously collected unemployment. I'm also in NJ. OP, you need to check your state's guidelines on this.

 

[Spock]

It will vary by state and also by how the severance is paid (lump vs. over time).
AZ's unemployment is 50% of pay BUT it's capped at $250/week for 6 months.
I was "involuntary early retired" May 31st so I waited to start unemployment benefits until late December. That way the bulk of the unemployment "income" was paid out (and taxed) the following year vs. being paid the same year as the lump sum severance spiking that years income tax.

 

[oldphd]

During my career I was laid off twice, both in Ohio, both quite a while ago.

First time, severance paid out over time. Advice from others was to apply for unemployment right away and let them decide. Payments didn't start until severance pay out was completed. No problem applying early.

Second time, severance paid out lump sum (different company policies). Applied for unemployment right away and payments started after the pay out was completed.

Both severances were of similar magnitude, 3-4 months salary. One advantage to the pay out over time was that I was allowed to stay on health insurance.

I think the best advice is to go ahead and apply, answer the questions, and let them tell you when it will start.

Good luck!