Tag: misconduct

New York Unemployment Benefits Severance Pay

Severance Pay Affects New York Unemployment Benefits

Since a 2014 reform to New York State’s Unemployment Insurance System, employees are generally not eligible to receive both severance pay and unemployment insurance at the same time. However, there are exceptions and nuances to this rule. As a result, employers sometimes have options that can affect their former employees’ receipt of New York unemployment benefits.

[You might also want to review this article on “Contesting New York Unemployment Claims”.]

New York Unemployment Benefits

In New York, employees must be completely unemployed and actively seeking work to be eligible for unemployment benefits. Most unemployed individuals with sufficient work history will be eligible for benefits. Employees who resigned or engaged in misconduct might not receive benefits.

Until several years ago, severance pay did not change employees’ New York unemployment benefits. Now, however, it often will.

What is Severance Pay?

New York’s unemployment insurance law defines severance pay as “payments made by an employer to an employee due to separation from employment.” Severance pay generally does not include payments regarding retirement, health insurance, accrued leave, or unemployment benefits.

The law recognizes that severance pay can be paid in several payments or one lump sum. And now the timing of the payment(s) matters for unemployment purposes.

Why Timing Matters

Whether severance pay affects unemployment benefits can depend on when the employer makes the payments.

If an employee receives severance pay within 30 days of his or her last day of employment, the severance may offset the unemployment benefits. In that scenario, the employee will not receive unemployment if the weekly severance payments (or pro rata portion of a lump-sum payment) are higher than the maximum weekly unemployment benefit rate. Once the severance payments have ended, the employee may be eligible to receive unemployment benefits (assuming they meet standard eligibility requirements).

On the other hand, if the employee does not begin receiving severance pay until more than 30 days have passed since their last day of employment, they can immediately collect unemployment. In this situation, the severance pay will not affect New York unemployment benefits at all.

(The “last day of employment” is the last day an employee was actually working or was on paid leave.)

Keep This in Mind

Eligibility to receive New York unemployment benefits is often an important issue for departing employees. Employers should carefully consider unemployment issues in developing severance packages.

When employers have options in structuring the severance payout, they should factor in the impact on unemployment benefits. The decisions involved can have meaningful financial implications for both the employer’s business and the former employee. The “right” choice will likely vary in different situations.

Contesting New York Unemployment

Contesting New York Unemployment Claims

Are departing employees eligible for unemployment? As usual, it depends. To claim unemployment insurance benefits in New York, employees usually must be totally unemployed, yet available for and seeking work. After that, the most important factors are whether the employee has worked long enough to qualify and the reason for separation from employment. Here, we’ll focus on that last question, as it’s the one employers most often use in contesting unemployment claims.

Before we go any further, here are related free webinars that might interest you:

Why Isn’t the Employee Working?

Unemployed individuals with sufficient recent work history will receive unemployment insurance benefits unless they became unemployed because of a disqualifying reason.

The primary disqualifying reasons for loss of employment are:

  • Voluntary resignation
  • Misconduct

Neither category is entirely straightforward under New York’s unemployment law.

Voluntary Resignation

Employees who quite a job entirely of their own accord usually will not receive unemployment benefits. However, there are some exceptions.

First, the departure must be truly voluntary. Employees who have no real choice but to “resign” may still receive unemployment. This could occur where the employer gives the employee the option to either resign or be terminated. It also includes situations where the employer was treating the employee unlawfully such that the employee understandably felt compelled to leave.

A second scenario is more surprising to employers. Suppose an employee resigns from Company A to work for Company B. If the employee then loses their job with Company B soon enough and for a non-disqualifying reason, then Company A may be credited with some portion of the employee’s resulting unemployment claim. Company A seldom can do anything to avoid or contest this result.

Misconduct

Many employees lose their jobs due to workplace misconduct. However, many of those employees will still receive unemployment benefits. Even when employers contest unemployment claims, proving disqualifying misconduct is difficult.

To win an unemployment claim based on misconduct, an employer must prove either extremely bad behavior or prior specific warning of the consequences for the behavior. In most cases, poor performance will not rise to the level of misconduct under the New York unemployment law.

Examples of misconduct that may justify a denial of unemployment benefits include theft, physical violence, falsifying documents, and workplace drug use. In addition, any misconduct that constitutes a felony should disqualify an employee.

Many other forms of misconduct that support termination of employment will not necessarily result in denial of benefits. These may include poor attendance, insubordination, carelessness, and violation of employer rules. However, any of these behaviors could constitute disqualifying misconduct under the right circumstances. Usually, this requires prior warning of the specific improper behavior and the future consequence of termination followed by more incidents.

Overall, the analysis of misconduct depends on the facts. But close calls usually get decided in the employee’s favor.

Minimizing Successful Unemployment Claims

Most New York employers of any size must accept some unemployment claims as part of doing business. Obviously, one way to avoid these claims would be never to let anyone go against their will. But that probably isn’t a good business model.

Employers who want to minimize the impact on their claims history can take precautions before discharging employees. This includes having clear discipline policies that spell out what forms of conduct are unacceptable. But that alone probably is not enough. Even if not written into policy, most employers will want to follow the concept of progressive discipline. This allows that extreme misconduct will cost employees their job in the first instance. However, employees will get a second chance for less consequential missteps. Any discipline notices should then include specific language about the consequences of further violations. When warranted, that would be termination of employment. With that prior warning in place, an employer’s chances of contesting the employee’s unemployment claim will increase.

For more about ending the employment relationship, check out these webinars: Don’t Fire Me on Friday and Conducting Your Next Reduction in Force.