Severance Packages May Cause Denied or Delayed Unemployment Benefits

From Joe's Story

Has your unemployment benefits been denied or delayed because you received a severance allowance from your employer?

I fought the battle and won - here how.

Unemployment
is new to me. In my 30+ years of working I had never experienced one
day of unemployment till this year. I lost my job as part of a
reduction in force (RIF) action by my employer in January. When I filed for unemployment benefits with the State of Colorado Department of Labor and Employment, with 48 hours I received a letter called a "Monetary Determination of Unemployment Insurance Benefits". The letter documented that I was eligible for benefits, the weekly benefit amount and maximum payable benefit amount for a year. With all the things to deal with as a result of the RIF, filing for unemployment seamed very straight forward and the state agency
was very responsive. It had appeared that the benefits I expected were
underway and I could concentrate on the job of getting a job.

About two weeks into the process I received a "Notice of Decision" letter from the state department of labor and employment. It started with a legal citation referencing the Colorado Employment Security Act Section 8-73-110 (1) (a) (III), (1)(b) bla, bla bla ... Bottom line, it said that because I received a severance allowance from my employer, my benefits would be delayed by the weeks of severance pay and that benefits would be reduced to almost $0.

When I was RIF'd I was in good company, hundreds of other co-workers around the world were affected and more to-be-affected as soon as local laws will allow my previous employer to proceed. I
networked with several of these folks and found that most were
receiving benefits from Colorado and other states, but a few were in
the same boat as myself. We determined that each state was
spot-checking information and apparently many who were checked and had
received a severance allowance from their employer were experiencing denied or delayed benefits.

The
notice of decision letter clearly outlined the appeal process. It
provided a link to the quoted Colorado laws and after reading it (no I
am not a lawyer) I thought it was pretty clear that the decision was
based on fact and in alignment with state law. A
former co-worker told me that a week earlier, he had received a call
from the state unemployment agency, asking if he had received a
severance allowance from our former employer. He argued with them that it was not a severance allowance but a separation package. Also that he was required to sign a "Release and Waver" agreement that included waving any claims arising from the termination of employment in exchange for the separation payment which also included COBRA and other benefits. This
seemed to satisfy the caller and he continued to receive benefits. So I
appealed the decision and waited for what I though would be similar
telephone conversation with someone from the state.

About a week later I received a "Notice of Unemployment Insurance Appeal Hearing" scheduled in 7 days in Denver at 11:30 AM. I prepared my case.

Studying the Colorado Employment
Security Act, I also found that the law provides that individuals who
receive payments from an employer other than wages shall be considered
to have received an "other cash payment" and that special consideration
would be given to this type of payment. I would build my case on the
fact that the payment I received was not wages; it was received because
I signing the release and waver thus giving up my right to pursue legal
action (lawsuit) connected with my termination. I faxed a copy of the "Release and Waver" agreement to the assigned hearing officer.

I arrived an hour early to the Colorado department of labor and employment
located in downtown Denver. Although requested to attend, my former
employer did not send any representation. I was greeted with respect,
cleared security and waited for the hearing officer to call my name.
She called me exactly on time, we reviewed the facts and I pleaded my
case. The hearing lasted about 20 minutes then the hearing officer said
I would be notified of a decision within 20 days and explained the
process for further appeal should I feel the need for one. I felt my chances of a successful appeal were less than 50%.

The next day I received the hearing officer's decision in the mail. The hearing officer agreed with my position and documented that section 8-73-110 (1) (a) (III), (1)(b) and (1.2) of the Colorado Employment Security Act was not applicable.

Conclusion: Don't
be intimidated by letters sent from state agencies. Work with them,
understand their process and ask them questions. Of course be
completely truthful and sincere. At one time I though, "I don't have a case", I called the department of labor and employment
to cancel the hearing as I was ready to accept their decision. I
actually got a knowledgeable, courteous professional; I briefly
outlined my thoughts and they encouraged me to continue with the
appeal. And I'm glad I did.