There are countless employment transactions that you must navigate and manage as an employee in California. One such transaction that can feel particularly complex and even daunting is switching employment and severance packages or agreements. Employees often face complicated agreements that produce considerable inquiries. The question is, “Can I collect unemployment if I have accepted or take a severance package?” It’s a complex query as it has some intersectionality between unemployment benefits and the solid but often tailored world of severance agreements, primarily through the lens of California employment and regulations.
A Brief Recap of Severance Packages
Typically offered when an employment relationship concludes, severance packages are agreements between employers and employees outlining the terms of the impending departure. These agreements often contain financial compensation, specifications regarding the continuance of specific benefits, and potentially other clauses, such as non-compete agreements or nondisclosure clauses.
Severance packages vary not only in their content and purpose but also in that some items are directed at employees while others are pro-employers. Some packages even include outplacement assistance or transition support with resources or services to aid former employees in their future job search and career transitions. These inclusions can propose stability in what can often be a mentally and emotionally trying time for employees faced with re-entering the job market. Severance packages are also a form of risk mitigation for employers as they aim to minimize potential legal hazards that terminations sometimes bring. The employee agrees to specific terms when accepting a package in exchange for its benefits and advantages, which can calm any turbulence associated with the departure. Offering well-structured severance packages is not mandatory, but it can contribute to maintaining positive relationships, help with employee morale, protect an employee’s reputation, and build trust within a company or business.
Although severance is not a universally mandated aspect of employment, some jurisdictions, including California, may have regulations governing the structure and the enforceability of these agreements. In the Golden State, where employment laws are constantly evolving, employees should stay aware of their rights and the potential legal implications of a severance offer.
A critical aspect to consider is the presence of provisions within the agreement. These conditions, frequently found as a release or waiver, may restrict the employee from bringing forward claims related to the termination of their employment. Workers should scrutinize the inserted clauses carefully and, when necessary, seek counsel from a knowledgeable party like a California employment law attorney. A competent employment lawyer can fully comprehend the articles of the severance agreements, translate any grey areas, outline and highlight any red flags, and note implications and ramifications. Employees have the power to strike a fair balance between accepting an appropriate severance package and preserving the ability to address any legitimate grievances that could pop up in the future.
Further, employees should look for “non-compete” or “non-solicitation” clauses that may be embedded in the severance agreement. California typically disfavors such restrictions, so understanding the scope and duration of these clauses is critical. Employees have the right to negotiate these terms to ensure they are reasonable and don’t unduly hinder future employment opportunities. Seeking legal counsel can empower employees to navigate these legal intricacies, ensuring their rights are protected while fostering an equitable resolution during this critical phase of their professional journey.
Unemployment Benefit Impact
One of the most considerable deliberations when accepting or evaluating the potential or agreeing to a severance package is its potential to impact unemployment benefit eligibility.
Unemployment benefits are often a lifeline post-termination and during a transitional career phase. You must consider the pivotal nature of your decisions. The interplay between these two realms, severance and unemployment benefits (UB), can be subtle and rely on many characteristics. Post-employment unemployed periods can range from a few weeks to months or longer. When you sit down and evaluate your severance package, you want to see how it impacts unemployment, and this may not be immediately obvious. The structure of several packages is often the focal point. If the severance pay structure is a lump sum, then the individuals may see a delay in UB eligibility. The timing of these payments can influence when you will be eligible to receive benefits. Identifying the duration and specifics of the severance agreement is equally important as it can determine when you can resume collecting or start receiving unemployment after the conclusion of the severance period.
Typically, in California, severance pay does not conflict with unemployment eligibility because severance pay does not qualify as wages. Further, most employees will choose to use up their severance pay and then start claiming unemployment benefits.
As it can take quite a while to get approved for unemployment benefits and start receiving the compensation, you may decide to apply before you use up your severance. However, you want to be sure you are, in fact, receiving severance and not some other sort of compensation and clearly taken off payroll before you submit to unemployment. An unemployment attorney can examine the offer being made and pinpoint if it is severance, what form of severance it is, if you will have a continuation of other benefits from your employer after termination, and when precisely other benefits will end. Additionally, you want to ensure you meet standard eligibility criteria for unemployment benefits, such as being out of work through no fault of your own, actively searching, and being able to work.
Negotiating a Severance Package
Considering the variability of severance terms, employees can negotiate certain aspects before agreeing. However, the negotiation process dramatically hinges on your ability to understand the legal language within the agreement and identify items that need further consideration. Legal fitness and confidence is a great advantage. A lawyer is beneficial in such instances to ensure the package aligns with your individual needs and circumstances, the nature of your concluding employment, and where you consider working next or in what domain and capacity.
A severance package is a strategic tool designed to facilitate smooth transitions for employers and employees during job separation. However, also keep in mind that the employer initially draws up the agreement and arranges the package, usually leaning in their favor in ways that may not always seem immediately apparent. To make informed decisions during sophisticated employment transitions, like the financial, legal, and emotional dimensions, you must prioritize understanding the different components and implications of the packages they receive. By doing so, you can better prepare yourself for tackling the challenges ahead and make the most out of the opportunities that arise.
Whether departing from your job and anticipating, reviewing, or negotiating a severance package or concerned with how severance and California’s unemployment benefit regulations intertwine, discussing the crossroads with a proficient counselor is wise. Contact SANFORD A. KASSEL, A Professional Law Corporation–your skilled California employment attorneys. Our team is highly experienced in severance agreements and with California employment law. We will provide a confidential consultation, at no cost to you.
