Severance or Unemployment?

Discussion in 'After Hours Lounge (Off Topic)' started by Jon.M, Feb 13, 2004.

  1. Jon.M

    Jon.M Stunt Coordinator

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    A friend of mine was laid off a week ago. At the time she was let go, she was offered a severance equal to six weeks pay. If she accepted it, she had to sign a form saying she wouldn't file for unemployment. She wasn't allowed to think about it. She had to decide before she left the HR director's office. In the end, she took the severance and signed the form. It got me thinking though, which provides the better benefit? Obviously the severance amount is known up front. The unemployment benefit would depend on how long she was out of work. Having never been on unemployment, I'm not familiar with the process, but I thought some sort of formula is used to determine how much unemployment compensation you receive. Does anyone know how it works and is when is it beneficial to choose unemployment over severance?
     
  2. BrianW

    BrianW Cinematographer

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    Unemployment (here in Texas, anyway) lasts for six months, and there may be a way to extend that under certain circumstances. For many people, however, unemployment isn't enough to provide a living wage. It's about $1300/month (again, in Texas), and you still have to pay incom tax on that.

    Still, if I thought I'd be out of a job for an extended period of time, then I'd choose the unemployment. But if I thought I could land a job before the severance pay ran out, then I'd pick the severance package. How much more her regular pay is than unemployment benefits would certainly be a factor. If she earns only $1300/month at her job anyway, then she'd be way better off with the unemployment. But if she earns six figures a month, then she's better off with the severence package. Everything in between is just a matter of degree. YMMV.
     
  3. Travis Hedger

    Travis Hedger Supporting Actor

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    Thats is bullshit.

    Here in Oklahoma, if you get laid off, you get serverance, then the next morning you can stand in line for unemployment.
     
  4. Brian Perry

    Brian Perry Cinematographer

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    I agree that it's BS.

    First of all, normally the choice is between taking severance or not signing a disclaimer waiving your right to sue or speak poorly about the company. Or sometimes you have a choice of whether to take severance in a lump sum or over time. I've never heard of a choice between severance and unemployment.

    Secondly, forcing someone to make that decision on the spot, after the shock of losing his or her job, is just plain cruel.
     
  5. Erik.Ha

    Erik.Ha Supporting Actor

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    I would suggest your friend contact your state department of labor. Something smells fishy there.
     
  6. Clinton McClure

    Clinton McClure Casual Enthusiast
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    Exactly. When I was laid off over two years ago, I had the option to maybe be called back in the future (no guarentees and the company I worked for would not take back middle management anyway) or I could waive that right and take a 26-week severance package, full pay & benefits, after which I could file for unemployment if I had not found a job.

    I asked where to sign.
     
  7. Chas_T

    Chas_T Supporting Actor

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    Probably varies from state to state, but in NJ, severence pay is treated seperatly from unemployment.

    In otherwords, you are delivered a pink slip with severence pay, you can collect unemployment benefits. Needless to say, both are a humbling experience.
     
  8. Danny Tse

    Danny Tse Producer

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    Excuse me, "Unemployment" is actually MY money. It gets deducted from each of MY paychecks. By applying for "Unemployment", I am just getting MY OWN money back.
     
  9. Mark Murphy

    Mark Murphy Supporting Actor

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    In Mass, I believe you can collect severance and anything beyond that period, you can collect unemployment for six months.
     
  10. Glenn Overholt

    Glenn Overholt Producer

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    Wouldn't that be like signing something under duress? - Like ILLEGAL?

    Glenn
     
  11. Malcolm R

    Malcolm R Executive Producer

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    Standard unemployment benefits are for 6 months. The formula is used to determine how much you are paid per week, based on your salary at time of termination.

    Your friend should be able to "have her cake and eat it too," so to speak. Though, depending on the regs in your state, she may have to wait six weeks (severance salary) until she can apply for unemployment benefits.

    Basically it sounds like your friend got 6 extra weeks of salary out of this company. I'm not a lawyer, but I can't believe the paper she signed is enforceable.
     
  12. Keith Mickunas

    Keith Mickunas Cinematographer

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    She can file with the state, if the company disputes it then each side tells their story and the state decides. Again, this goes by state. She can definitely try for it, it's not like they can take that money back from her.
     
  13. KyleS

    KyleS Screenwriter

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    Yes and no on this one Danny. Yes you have been putting money away for this but the company still has to put money towards it as well and usually a lot more then you put down and it could go on, depending upon the state, for a much longer time then what they offered her.

    I would immediately contact your State Department of Labor they will give you the low down on what you are/are not able to do. I would guess that the paper would not hold up in court but she also wouldnt be able to apply until her severance ran out since it is pay from the company and they will ask you if you received any.

    It might not hurt to talk to a lawyer in case they are breaking the law (under Duress) and she might have a bigger case against them or B that what they did was legal and you wouldnt want to file unemployment against the company because they could come after her.

    KyleS
     
  14. Cary_H

    Cary_H Second Unit

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    In Canada you can apply for U.I. the very next day. The catch is that they take your severance money into account and your claim won't kick in until they deem you've used it up first.
    They've made changes to our system of late, but there was a cap on the maximum you'd get. Something in the ballpark of $600ish net every two weeks.
    I also agree that something smells fishy around making you sign something along the lines you describe. I see no connection between the two.
    I have seen where they have you sign an agreement that says they are only obligated to pay you half of whatever severance you have coming in the event you take on new employment.
     
  15. Wayne Bundrick

    Wayne Bundrick Cinematographer

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    One possible reason the company didn't want her to file for unemployment is because (in my state at least) at the start of each year the unemployment taxes a company has to pay will be adjusted up or down depending on how many people the company laid off during the previous year. Every company has to pay some unemployment taxes, but the companies that put more people on unemployment have to pay more.
     
  16. Erik.Ha

    Erik.Ha Supporting Actor

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    I'm wondering if her company hasn't been Paying into unemployment for her (i.e. COOKING THE BOOKS) and don't want to get NAILED if she applies for it...
    [​IMG]
     

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