Q: If a claimant receives dismissal or severance pay, will it affect their benefits?
A: A claimant may be eligible for Unemployment Insurance if the weekly payments of dismissal or severance pay are the same as or less than the maximum benefit rate. The claimant must notify the Telephone Claims Center if they receive or will receive dismissal or severance pay within 30 days of their last day of employment. This applies even if they receive dismissal or severance pay after filing a claim. If the claimant does not notify us, they may receive an overpayment of benefits, which must be paid back. The claimant also may be subject to other penalties.
Q: What is an employee’s last day of employment for the purposes of dismissal or severance pay?
A: An employee's last day of employment is the last day he or she actually worked or was on paid leave, such as a scheduled vacation or medical leave.
Q: Is WARN pay the same as dismissal/severance pay?
A: No. Payments made under the New York State WARN Act (Worker Adjustment and Retraining Notification Act -- Article 25-A of the Labor Law) are not considered dismissal or severance pay. The WARN Act states that Unemployment Insurance benefits may not be denied or reduced because a claimant is receiving WARN payments.
Q: Can dismissal or severance pay be used to establish a new claim after the dismissal or severance pay ends?
A: No. Only wages or earnings for actual employment can be used to establish entitlement to a claim.
Q: Is dismissal/severance pay paid in a lump sum treated differently from payments made over a period of time?
A: No. Any dismissal/severance payment received within 30 days of a claimant's last day of work, whether as a lump sum or in payments made over a period of time, may affect a claimant's benefits.
Q: What if I send dismissal or severance pay to a union, and the union sends it on to my former employee(s)?
A: The same rules apply as if your former employee(s) were receiving the dismissal or severance directly from you. Your employee(s) are considered to have received the dismissal or severance pay when it is transferred from you to the union, not when the former employee(s) actually receive it.
Q: If a claimant rolls their dismissal or severance (either lump sum or scheduled payments) into a qualified Individual Retirement Account, will their benefits be affected?
A: The claimant would not be eligible for benefits as long as they are receiving dismissal or severance payments that exceed their benefit rate, regardless of what they do with the payment.
Q: Does receiving a pension affect a claimant’s benefits?
A: A person who is retired and not seeking employment is not eligible for Unemployment Insurance benefits. A person who is retired and actively seeking work may be eligible for benefits under the same conditions as other workers.
Q: Can other types of retirement payments be considered pensions, and therefore reduce Unemployment Insurance benefits?
A: Yes. The pension reduction applies to a governmental or other pension, retirement or retired pay, annuity or any other similar periodic payment which is based on previous work.
Q: Is a 401(k) considered a pension that reduces a claimant’s benefit rate?
A: A claimant's benefit rate could be reduced if they received a payment from a 401(k) if a base period employer contributed to it. This would apply if the claimant receives periodic 401(k) payments or if the claimant is unemployed due to retirement but remains active in the workforce and receives a lump sum payment. The pension reduction applies to a governmental or other pension, retirement pay, annuity or any other similar periodic payment which is based on previous work.
Thanks for the feedback! It will help us improve your experience.