Will I forfeit unemployment benefits if I sign a severance agreement?

Asked on October 19, 2015 under Employment Labor Law, Texas


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

If an employee signs some sort of severance agreement and it states that the separation is voluntary on the employee's part e.g. that the employee resigned, this might make the employee ineligible to receive unemployment compensation. This is true because only involuntray termination allows an employee to be eligible for unemployment insurance. Therefore, if an employee signs a document stating that they left by their own free will, the agreement can be used to oppose the employee&rsquos unemployment compensation claim.
Additionally, if an employee receives severance pay and it is paid all at once, it doesn&rsquot affect their end date of employment. They are still terminated whenever they are taken off the payroll. However, sometimes instead of a lump-sum severance, an employer will pay severance over time by keeping the employee on payroll even though the person has been terminated. This type of severance will prevent the employee from receiving unemployment compensation until the last payment is made.
Therefore, while severance does not automatically bar an employee from collecting unemployment, there are circumstances under which it can. It is vital to review the terms of any severance or release and separation agreement.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.