New York Unemployment Insurance (UI) law is undergoing some significant changes which will take effect on January 1, 2014. These affect, among other things, whether an employee can receive UI if they’ve received a severance or a certain kind of pension, and whether an employee can requalify for unemployment insurance if they’ve been denied in the past.
In the past, whether someone received UI was generally unaffected by the receipt of severance pay, meaning that if your employer gave you a lump sum upon your separation, you could still receive benefits. This made sense, since severance pay is usually not meant to tide the employee over until they can find a new job, but is rather either (a) a recognition of years of service (kind of like a bonus that you only get when you’re fired) or (b) as consideration for signing a release (i.e., they pay you in exchange for which you promise not to sue them). In neither case is the severance really meant to do what UI does – allow people to get by while they look for a new job.
Starting January 1, 2014, this will no longer be the case. Now, if an employee receives severance pay within 30 days of their termination, that severance pay is offset against UI. So let’s say you would be entitled to $300/week of unemployment, but you receive $3,000 in severance within 30 days of your termination. Under the new changes, you wouldn’t be able to collect UI for 10 weeks. The calculation is done weekly, meaning that the severance pay is divided by the amount of benefits you would receive from UI each week, and the result is the number of weeks you’re no longer eligible to receive UI.
One possible result is that terminated employees will simply refuse to sign releases in exchange for severance – after all, in this economy it’s entirely likely that someone will have to spend months, if not longer, looking for work before finding a new job. If the severance payment is less than the UI someone expects to receive, there’s really no benefit to signing away your rights. On the other hand, employees can request that their employer not pay out a severance payment until 30 days after their termination, which presumably would sidestep the UI issue.
Another significant change involves employer-contributed pensions. If you are receiving a pension from your last job (i.e., the job in connection to which you’re applying for UI), and the employer contributed to that pension, your UI will be reduced by the amount of pension you’re receiving. If you and your former employer both contributed to the pension, then the Labor Commissioner will decide how much of your UI will be reduced by the pension payments.
Given how few jobs these days provide pensions to workers, and how little people can expect to get from Social Security, this is quite a blow to older workers. However, keep in mind that this reduction only applies to the first period of unemployment – if you are let go from job A, and job A gives you a pension to which your employer contributed, your UI is reduced by the pension amount. If you get a new job, and are then let go from that job also, then you will be able to receive UI and the pension from job A without a UI reduction.
If you were terminated for misconduct or quit your job voluntarily and without good cause, you can’t receive UI for that period. That’s always been true. What’s different now is that, in order to receive UI in the future, you have to (a) find a new job and (b) earn ten times the amount of weekly UI benefits you would otherwise receive (previously, you only had to earn 5x your weekly UI).
This penalizes low wage workers more than others. Someone earning minimum wage for 40 hours per week is likely to receive about $145/week in UI. Someone who is disqualified would thus have to earn $1,450 at a new job before they can requalify – that’s about five weeks of full time work at minimum wage before the employee is eligible to receive future UI. Someone earning $200,000/year (and receiving the maximum benefit of $405/week), however, would only have to work for a single week before requalifying.
The entire point of the penalty, of course, is to discourage people from quitting for no reason (or engaging in misconduct that gets them fired). While this makes a certain amount of sense, workers and the Department of Labor may disagree about what constitutes “good cause” for quitting. While you might think that being unable to get along with your supervisor, or even being verbally abused by your supervisor, would constitute “good cause” for quitting, the UI board may or may not agree.
However, keep in mind that many disqualification determinations are overturned on appeal – so if you’ve been disqualified initially, all hope is not lost. Make sure you read carefully all the materials sent to you by the Labor Dept. so you can preserve your rights.