SYRACUSE — An amendment to New York’s Labor Law that took effect on Jan. 1 could affect how terminated employees negotiate severance packages. Under the amendment, New York workers who are terminated could become ineligible for unemployment insurance (UI) for a time, if they accept an immediate severance package from their employers. Under the new […]
SYRACUSE — An amendment to New York’s Labor Law that took effect on Jan. 1 could affect how terminated employees negotiate severance packages.
Under the amendment, New York workers who are terminated could become ineligible for unemployment insurance (UI) for a time, if they accept an immediate severance package from their employers.
Under the new law, employees aren’t eligible to receive UI benefits during the weeks they receive severance pay, if their payments exceed the maximum weekly benefit rate, which is currently $405.
Employees will qualify for UI benefits if their initial severance payment arrives more than 30 days after the termination, says Heather Youngman, an associate focusing on civil litigation at the Syracuse office of Albany–based Tully Rinckey PLLC.
The firm’s local office is at 507 Plum St. in Syracuse.
Before the amendment, even if they did accept a severance package, employees were still eligible for unemployment insurance, Youngman says.
“Under the change, if the [New York State] Department of Labor (DOL) determines that an individual has received a severance within 30 days from the end of their employment, and that severance pay is higher than the maximum benefit, which is $405 a week, then the employee can’t collect the unemployment insurance until that severance package is exhausted,” she says.
Companies usually offer severance packages to employees who are under contract or who have worked for a company for a long period of time. The affected workers are usually professional employees or are “higher-skilled” workers, Youngman says.
“We don’t see a lot of minimum-wage workers being offered a severance package,” she says.
When negotiating a severance package, an employee should seek an extension of health-care benefits, Youngman says.
Other terms could include an employer promising to provide a positive job reference as the affected worker seeks new employment, she adds.
An employer also might promise not to contest unemployment-insurance benefit claims, beyond the boundaries of what’s permitted under the new amendment, she says.
The affected employee might also seek a lump-sum severance payment, or a continuation of payment for an extended period of time.
If the affected employee were to accept an immediate lump-sum payment, that person would be ineligible for unemployment insurance for a number of weeks based upon the maximum benefit amount.
The maximum benefit amount is one of the factors that the DOL uses to consider length of ineligibility, Youngman says.
The DOL also considers how much the employee earned per week in making the determination, she adds.
Gov. Andrew Cuomo last March approved this change to the state labor law in the state’s 2013-14 budget.
The amendments are part of an unemployment-benefit overhaul intended to save employers statewide an estimated $400 million over 10 years.
The law’s new provisions, some of which took effect last Oct. 1 and others that went into effect Jan. 1, will save Central New York employers an estimated $16 million over that period, according to a report from the state Department of Labor.
Contact Reinhardt at ereinhardt@cnybj.com