Posted On: April 30, 2010

Severance Pay and Unemployment In Maryland

One of the most common questions that we have been receiving lately has to do with whether a person can obtain unemployment benefits if they are also receiving severance pay. Unfortunately, in the past, Maryland employees could sometimes obtain unemployment benefits even if they were being paid severance (if their position was abolished). That law changed last year, however, and now claimants who are begin paid severance are ineligible to collect unemployment benefits during the time frame when they are receiving severance payments. If they receive a lump sum severance payment, then the Department of Labor will determine how many weeks of salary would be covered by the severance payment, and the claimant will be disqualified for that time frame.

A more complicated issue is whether a person can receive unemployment benefits when they are fired from a company and then negotiate a settlement in return for signing a release stating that they will not sue for discrimination or sexual harassment or similar illegal conduct, where the person actually was subjected to such discrimination or harassment. In those cases, a strong argument can be made that the monies received are not severance payments for the loss of the job, but rather compensation payments for releasing a potentially viable discrimination or harassment claim. To prove such entitlement to unemployment benefits, however, the claimant typically has to file an appeal and appear before a Hearing Examiner.

In the event that you are facing such a situation, please give us a call or send us an email so we can determine if we can assist you.