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How Does Severance Pay Affect Unemployment?

Collecting Unemployment When You Get Severance Pay

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When you are laid-off from a job and receive severance pay it can impact your unemployment benefits. How severance pay is handled depends on state law. Different states have different policies regarding severance.

For example, receiving severance pay does not impact your benefits in California. You need to report the amount you receive, but it will not be deducted from your unemployment compensation. In New York, if you continue to receive the exact same benefits you received while working until you find a new job you would not be eligible for unemployment.

In Texas, severance will not stop receipt of unemployment benefits, but payments will be delayed until the payment's period of coverage has expired. Unemployed workers in Florida are not entitled to unemployment compensation for any week that the severance pay is equal to or greater than the weekly benefit. If severance is lower than unemployment, you would be paid the difference.

Even if severance is not deducted from unemployment benefits, you are required to report it when you file a claim.

Pay in Lieu of Notice

Similar to severance pay, pay in lieu of notice is wages paid to an employee who was laid off without notice when the employer was required to provide advance notification of a lay-off.

Check With Your Unemployment Office

Because laws vary from state to state it's important to check with your state unemployment office for how severance pay will be handled. You may find the information you need online or you will be able to find a phone number to call for assistance.

Don't wait to apply for benefits even if you're not sure about your current eligibility. It's important to get your claim in the system so you can receive the maximum benefits you are eligible for. Report your severance pay when you file the claim, and your unemployment compensation will be calculated for you.

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