Understanding your financial options when you leave a job is crucial. Severance pay can help you temporarily pay your bills until you can find new employment. However, many people ask, “How does severance pay affect unemployment benefits in Minnesota?”
This article answers that important question and others, including “What disqualifies you from unemployment in Minnesota?” and “What is exempt from unemployment in Minnesota?”
Severance pay is money an employer provides to an employee when their employment ends. Severance “packages” can take various forms, including a lump sum payment, continued salary payments over a specified period, or a combination. While severance is a helpful bridge, the initial offer may not be adequate, particularly if you believe your termination was motivated by illegal factors like discrimination or retaliation. If you feel you have been wrongfully terminated, the attorneys at Wanta Thome can help you negotiate a more substantial severance package.
The key thing to remember about severance pay in Minnesota is that it is generally considered income and, consequently, can reduce or delay payment of unemployment benefits.
This is one of the most frequently asked questions, and the answer is usually “yes, but with a delay.” Under Minnesota law, if you receive severance pay, you are generally not eligible for unemployment benefits for the number of weeks that your regular income is represented by the severance payment.
For example, if your weekly salary was $1,000 and you received a severance package of $4,000, the Minnesota Unemployment Insurance (UI) program will likely consider this to cover four weeks of your previous earnings. During these four weeks, you typically can’t receive unemployment benefits. Once this “severance period” ends, you may then become eligible for unemployment benefits, assuming you meet any other eligibility requirements.
This delay makes ensuring your severance package is fair even more critical. If you suspect your termination was illegal, you don’t have to accept the first offer. Contact the experienced employment attorneys at Wanta Thome to discuss how we can help you negotiate for the compensation you are rightfully owed.
Beyond severance pay, several factors can disqualify you from receiving unemployment benefits in Minnesota. The primary reasons relate to the circumstances of your job separation and your ongoing availability and search for work.
Generally, you can’t get unemployment if you choose to quit your job and aren’t doing so in response to some action or behavior by your employer. There are exceptions, such as quitting for serious illness or injury (your own or an immediate family member’s), unsuitable employment, or domestic abuse.
Similarly, if your employer fires you for misconduct, you will probably be disqualified. Employment misconduct is defined as intentional, negligent, or indifferent conduct that seriously violates the employer’s reasonable expectations for behavior. Examples include unexcused absences, drug or alcohol use on the job, breaking company rules, intentional neglect of duties, theft, fighting, or harassment.
However, it is crucial to recognize that an employer may use “misconduct” as a false justification for a termination that was actually illegal. If you believe your firing was truly due to discrimination (based on age, race, gender, disability, etc.) or in retaliation for whistleblowing or other protected activity, you should not simply accept the company’s reasoning. In these situations, we can help you challenge the wrongful termination and negotiate for the severance you are rightfully owed. Read also: What Are My Legal Rights if I Resign?
While many types of income can affect unemployment benefits, some payments are generally exempt or treated differently. For example, payments for accumulated sick leave or periodic employer contributions to group insurance premiums for a former employee are typically excluded from calculations for severance pay purposes. Some types of pensions or 401(k) payments also might not affect your unemployment benefits under specific conditions.
This is a crucial question. While it might seem like a good idea to wait until your severance pay runs out, it is generally advisable to file your claim immediately after you stop working full-time, even if you are receiving severance pay. Unemployment claims in Minnesota typically start on the Sunday of the week in which the person applies. Waiting too long could inadvertently shorten your “benefit year,” meaning the 52-week period when you can collect benefits if eligible.
Being clear about the relationship between severance agreements and unemployment benefits is critical. However, the most critical step for many terminated employees is evaluating the legality of the termination itself. If you suspect your firing was unlawful, an experienced Minneapolis employment lawyer can provide essential guidance.
Our firm does not review standard severance agreements. We focus on helping clients who believe their termination was illegal and want to negotiate a more significant severance package. We can:
Given the nuances of Minnesota employment law, getting legal advice is the best way to protect your rights and maximize your financial resources if you have been wrongfully terminated.
Conclusion
Severance pay in Minnesota is a valuable resource, but it directly impacts the timing of your unemployment benefits. Your benefits will likely be delayed for the duration that your severance pay represents your regular wages.
While it’s a good idea to file your unemployment claim soon after your separation, the most important action you can take is to question the fairness of your termination. If you suspect you were fired for discriminatory reasons or in retaliation for a protected action, you may be entitled to more than your employer offered.
If you believe your termination was wrongful and want to explore negotiating a higher severance package, contact us for a free initial consultation. We are here to help you fight for the compensation you deserve.
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