Employees frequently ask how their unemployment will be affected by severance payments when they are let go by a company in Massachusetts. Employees who are separating from their company and have been granted severance pay are often filing for unemployment benefits shortly after leaving their job. Depending upon how the agreement is written, the severance pay may or may not impact upon unemployment benefits.
The Executive Office of Labor and Workforce Development has an excellent fact sheet on severance pay and unemployment benefits in Massachusetts on its website which is a good start. Where an employee was required to sign a release of claims in order to receive the severance pay, then the employee could be eligible to receive unemployment benefits simultaneously with the severance pay.
Without a written agreement and waiver of rights, severance pay in Massachusetts is considered to be income and the terminated employee would not collect unemployment benefits for the same weeks as the employee received severance pay. Keep in mind that employers may make a lump sum severance payment or pay severance over the course of a number of weeks. The manner in which the severance is paid may affect unemployment benefits if there is no written agreement. Other statements in the agreement may affect whether you will be eligible for unemployment benefits.
A severance agreement is a contract and it can restrict your employment opportunities after you sign it. You should make sure you understand it and how it affects your rights. If you recently complained to the company about how it treated you, or you have had a serious illness or are over the age of forty, you may have additional rights that you will be waiving.
For a free consultation, please call Boston Labor and Employment Attorney Maura Greene at 617-936-1580. In 2012, Maura Greene was named in the Boston Globe as one of Boston’s top rated labor and employment lawyers.