If your employer lays you off work, the company may offer you severance pay as part of your termination package. Severance pay is usually based on the length of employment with employees who have been with the company longer receiving larger severance payments. Payments may be a lump sum, or distributed over a number of weeks. The type of severance you receive can reduce or delay your unemployment benefits in Ohio.
The Ohio Department of Job and Family Services administers the unemployment insurance program for Ohio. The ODJFS will review your unemployment claim and determine the amount of benefits you're eligible to receive by looking at your past wages. They'll notify you of your estimated benefit amount. This amount you'll receive on weeks in which you have no deductions. When you file your unemployment claim, you're required to list any income you received that week from part-time or temporary work, from back pay, holiday pay or vacation pay from your former employer. Include any severance pay received.
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Severance and Unemployment
ODJFS treats severance differently depending on how it pays out. If you receive a lump sum and your employer doesn't assign that pay to a specific week, the payment reduces your unemployment check only for the week in which you receive the money. If you receive a weekly check for a set number of weeks, or if you receive a lump sum, but your employer designates the payment as covering a specific number of weeks, then your unemployment benefit will only be reduced or eliminated for those weeks.
Figuring the Deduction
Once the ODJFS notifies you of your weekly benefit amount, calculate how much your severance pay will reduce this benefit. For severance pay, subtract the amount of the severance payment for that week from your weekly benefit. If any money is left over in your benefit after your subtract the severance payment, that's how much you'll receive in unemployment that week. If the severance payment is more than your unemployment benefit, you won't receive an unemployment check that week. The severance payment only affects one week at a time -- if your severance check equals twice your unemployment benefit check, it still only affects one week's worth of unemployment.
Severance and Benefit Year
When you receive your statement from the ODJFS showing your expected weekly benefit, you'll also receive information about your benefit year. Your benefit year begins the day you file for unemployment. Ohio pays regular unemployment benefits for 26 weeks -- if you collected full benefits every week, your regular unemployment would last 26 weeks. Emergency and extended unemployment could extend this. You have one year -- 52 weeks -- in which to collect benefits. So, any weeks that you do not collect a full check, due to wages earned or severance checks, extends that initial 26 weeks worth of payments a little farther. You still have to collect the full amount by the end of your benefit year, but severance pay doesn't decrease the total amount of unemployment benefits you are eligible to receive.