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How Does Vacation Pay Affect Unemployment?

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When you receive pay for unused vacation or flexible leave benefits upon leaving your job, it may impact your unemployment benefits. State regulations regarding how vacation pay will impact unemployment benefits vary. Check with the unemployment office for your state to get the definitive answer for your location.

General Guidelines on Vacation Pay
 

In some states, lump sum payments for vacation time awarded at termination will not decrease benefits. When employees receive ongoing payments for vacation during while they are unemployed, those payments will often reduce their unemployment checks.  However, some states allow all workers without a set date for resuming employment to obtain full benefits while receiving vacation pay.

When states do reduce benefits, some deduct the full amount from unemployment awards while others will reduce payments by a percentage of the vacation pay. Some states allow a certain amount of vacation pay or other income before reducing benefits dollar for dollar.

Laid-off employees with a set date to go back to work who use vacation pay during their period of unemployment will usually have their benefits reduced.

Check With Your Unemployment Office

Because laws vary from state to state, it's important to check with your state unemployment office for how vacation pay will be handled.

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