Thursday, June 23, 2011

Pennsylvania Unemployment Compensation Reform: Severance Pay

As I blogged on Monday, Pennsylvania just enacted Unemployment Compensation reform, including new provisions requiring that claimants actively search for new employment. You can read a copy of the law highlighting changes here . The new law also amends 43 P.S. § 804 to include severance pay provisions.

Under the new law, a Claimant will receive "compensation in an amount equal to his weekly benefit rate less the total of . . . the amount of severance pay that is attributed to the week." The phrase "severance pay" is defined as:
one or more payments made by an employer to an employe on account of separation from the service of the employer, regardless of whether the employer is legally bound by contract, statute or otherwise to make such payments. The term does not include payments for pension, retirement or accrued leave or payments of supplemental unemployment benefits.
However, the amount of severance pay that "counts" is a little tricky. It is calculated by taking the total amount paid and subtracting 40% of the Pennsylvania annual average wage. I've seen reports which put 40% of the average annual wage at $17,853, so it will only impact people who get fairly large severance payments. Sorry folks, no negative numbers . . . if you get less than $17,853 your "severance pay" is calculated as zero. The portion of that "severance pay" (as we just defined it) that counts for any given day or week is equal to the Claimant's daily or weekly full-time wage.

Pictured: Centre County CareerLink (Photo by me).

Posted by Philip Miles, an attorney with McQuaide Blasko in State College, Pennsylvania in the firm's civil litigation and labor and employment law practice groups.