If I was just laid off and was promised several months severance continued as paychecks, do I need to notify my state’s unemployment department or just wait until it runs out?

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If I was just laid off and was promised several months severance continued as paychecks, do I need to notify my state’s unemployment department or just wait until it runs out?

Mt company dissolved.

Asked on September 30, 2016 under Employment Labor Law, New York

Answers:

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

Answered 4 years ago | Contributor

If a worker receives severance pay and it is paid all at once, it doesn't affect their end date of employment. They are still terminated whenever they are taken off the payroll, so they can be eligible to collect unemployment at that time. However, sometimes rather than a lump-sum severance, a company will pay severance over time by keeping the employee on the payroll even though they have been terminated (such as in your case). This type of severance prevents the employee from receiving unemployment benefits until the last payment is made. Bottom line, while severance does not automatically bar an employee from collecting unemployment, there are instances when it can.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

You are not eligible for unemployment benefits until your severance has been fully paid out and you are not longer receiving paychecks: you should not apply until your severance is done. If you should apply earlier and get unemployment while receiving severance, if the agency becomes aware of that, they can require repayment of the unemployment benefits.


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