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Delaying Unemployment Checks For People Who Get Severance Pay [AUDIO]

Unemployment benefits in New Jersey for people who receive full severance pay would be delayed if a newly introduced bill becomes law.

Unemployment Line
Joe Raedle, Getty Images

Assemblyman Jack Ciattarelli sponsors the measure that he says is designed to reform New Jerseys’ unemployment insurance benefits program and further strengthen the state’s Unemployment Insurance (UI) Trust Fund.

“For those who have lost their job, that’s heartbreaking, but when they’re receiving severance they haven’t lost their pay,” explains Ciattarelli. “My bill would make it illegal for anyone who is receiving full severance pay to also receive unemployment benefits.”

Severance pay is money that an employer might give to someone who is leaving their employment. Normal circumstances that can warrant severance pay include layoffs, job elimination, and mutual agreement to part ways, for whatever reason. No law requires an employer to pay severance.

NJ’s Unemployment Insolvent in ’09

“Through common sense reform, hard work and bipartisan cooperation, New Jersey has nearly dug itself out of an abysmal hole in the Unemployment Insurance Trust Fund,” says Ciattarelli. “However, there are additional common sense reforms that are more than fair and reasonable and will help ensure a solvent system over the long-term.”

New Jersey’s UI fund became insolvent in 2009 and reached a $2.1 billion deficit in 2011. Reforms have positioned the fund toward solvency. Reforming rules for fired workers has saved $165 million in less than three years.

Under the Assemblyman’s legislation, workers could not receive unemployment benefits in any week they received severance pay equivalent to a full week’s worth of wages.

Lump sum payments would be divided by a person’s weekly wage to determine the number of weeks the unemployed worker would be ineligible for unemployment benefits. The bill would preserve full state and federal unemployment benefits after full severance payments have ended.

“No one is being denied here their 26 weeks of New Jersey unemployment benefits,” says Ciattarelli. “Government’s job is to provide programs that serve citizens during times of great need. Citizens, however, also have a responsibility in this social pact to only use governmental programs when, in fact, they are in great need. Collecting unemployment benefits while also receiving full severance pay is inconsistent with the spirit and intent of this program.”

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