Wednesday, May 20, 2015

Severance and Pennsylvania Unemployment - Doing the Math


Can I Receive Severance and Pennsylvania Unemployment Benefits at the Same Time?  

Yes, you can.

How Much Severance Pay Can I Get Before My Unemployment is Reduced in Pennsylvania?

As of May 20, 2015, the answer to that question is: $19,417.

How Much Unemployment Will I Lose if I am Paid Severance in Pennsylvania?

Unless you receive severance in excess of $19,417, the answer is Zero.


If you receive $19,417 or more in severance, the answer, as provided by the Pa. Department of Labor Website, is as follows:

A claimant receives $32,000 in severance pay. Forty percent of Pennsylvania's average annual wage ($48,542.52 for 2015) is $19,417.00. Therefore, $19,417.00 is subtracted from $32,000 equaling $12,583, which is the amount of the claimant's severance pay that is deductible. The claimant was earning $1,200 a week at the time of his separation. Accordingly, the deductible amount of severance pay is allocated at $1,200 per week to the first 10 weeks the claimant is unemployed. Because $1,200 exceeds the maximum weekly UC benefit rate, the claimant would not receive any benefits for this 10-week period. The 11th week would be calculated by taking the remaining severance pay amount of $583.00 to determine eligibility.

Here is how I explain the above proposition/formula to my clients:

Simple Math?
For every week of severance of you get in excess of $19,417, you will lose one week of unemployment benefits.

Wondering About Best Ways to Negotiate Severance?  Click Here

Here is the more complicated way of figuring things out (showing my work, I suppose:

1) Take the gross (pre-tax) amount of your severance.

2)  Subtract $19,417 from that gross amount.

3)  The product of the above is your deductible severance.

Example: Your gross severance package is $19,418 - your deductible severance is $1.

Once you determine your deductible severance, you determine what your weekly pay rate was while you were employed (it will in almost all circumstances be more than the maximum weekly benefit rate allowed under Pennsylvania unemployment law, which is $583).

Now, take your deductible severance and divide it by your weekly pay rate at the job you separated from; the product of that equation is the number of weeks of unemployment you will lose.

Example:  Your deductible severance is $10,000; your weekly pay rate was $1,000.  $10,000 divided by $1,000 is 10.  You would not get any unemployment for the first 10 weeks of your eligibility.

Helping Pennsylvania Workers since 1991
Philadelphia Area Employment Attorney Representing Employees

John A. Gallagher is an employment lawyer who represents employees in Pennsylvania. 

John typically represents employees who need an employment lawyer in Philadelphia County, Chester County, Delaware County, Bucks County, Berks County, Lancaster County and Montgomery County.

Pennsylvania Employment Attorney Provides Free Telephone Consultations

If you are looking for an employment lawyer, and live in Malvern, Wayne, King of Prussia, Downingtown, Glenside, Doylestown, Radnor, Newtown Square, Exton, Philadelphia, West Chester, Skippack, Langhorne, Haverford, Nether Providence, Broomall, Drexel Hill, Reading or any of their surrounding towns, feel free to send me an e-mail or give me a call.  I am always glad to spend some time with people via a free telephone consultation.

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Click Here if you have questions about any aspect of employment law, from wrongful termination, to wage and overtime claims, to discrimination and retaliation laws, to Family and Medical Leave

Click Here if you have questions about any aspect of Pennsylvania Unemployment Law, from willful misconduct, to voluntary quit, to Referee Hearings, to severance issues

Click Here to e-mail John directly.


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