Texas unemployment laws follow the U.S. Department of Labor guidelines, providing unemployment compensation benefits to qualifying individuals. Qualification requires separation from employment through no fault of your own, and a severance package could be indicative that your employment ended at your employer's request. When you file for unemployment benefits, your last employer receives notification and an opportunity to oppose your benefits. If you receive a severance package, the content and terminology, along with employer opposition, determines whether or not you receive unemployment compensation benefits.
Eligibility for Texas unemployment compensation benefits requires a work history of 15 to 18 months prior to your separation from employment. You must apply for benefits. Your recent employer has 14 days to respond to your unemployment claim, but this does not delay your benefits. Your employer will notify the Texas Workforce Commission of post-employment payments made. A difference exists in severance pay and wages in lieu of notice in Texas. The TWC delays payments if it determines that you were paid wages in lieu of notice. There is no delay for severance pay.
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Texas Payday Law defines severance pay as money paid beyond wages owed at termination of employment. Severance pay does not include liquidated damages, payment for release of claims or payment in lieu of notice. The employer does not owe severance pay unless he promises it in a written policy. According to the Texas Workforce Commission, most employers designate post-employment wages as severance pay. You may receive Texas unemployment compensation benefits immediately even if you receive severance pay.
Wages in Lieu of Notice
Wages in lieu of notice will prevent you from collecting unemployment benefits for those weeks you receive payment by your employer. Wages in lieu are voluntary payments made by the employer, unenforceable under the Texas Payday Law, because no contract exists for the payment. Section 207.049(1) of the Texas Unemployment Compensation Act disqualifies an applicant for the period of time he receives wages in lieu of notice. Wages in lieu of notice postpones your ability to collect unemployment, but does not shorten the length of time you can collect benefits. The standard understanding of wages in lieu of notice in Texas is that if there is no obligation by the employer and no notice to the employee, payment received will be wages in lieu of notice.
A severance package may include several elements, with severance pay, payment for release of all claims, a confidentiality agreement, liquidated damages and maybe even a few months of COBRA health insurance payments. You can accept all of these benefits and file for unemployment compensation benefits immediately. If you accept any payment identified as payment in lieu of wages, you may cut yourself out of unemployment benefits for the weeks covered by the payment in lieu of wages.