Can You Get Unemployment if You Accept a Severance in Georgia?

Not every laid-off worker in Georgia is given a severance package. Getting a lump sum payment or periodic severance payments can be a lifeline for workers who are no longer earning wages, but there may be a downside when it comes to eligibility for Georgia unemployment insurance benefits. That impact depends on the amount of money the worker receives.

Every state offers unemployment insurance benefits to unemployed workers. Georgians who are out of work may be eligible for state unemployment insurance (UI) benefits under a program administered by the Georgia Department of Labor (GDOL). A worker applies for UI benefits by filing a claim that is evaluated by GDOL agents. An unemployed Georgia worker is usually eligible to collect benefits if they meet these criteria:

• The worker must be unemployed through no fault or misdeeds of their own.
• The worker must have earned certain minimum income during the base period established by Georgia law.
• The worker must be able to work and be actively seeking new employment.

Regular Georgia state unemployment benefits are supplemented by federal aid under the Coronavirus Aid, Relief, and Economic Security (CARES) Act for pandemic related unemployment claims. The federal law also expands eligibility and duration of benefits for these claims.

Most individuals filing for unemployment insurance benefits in Georgia do so online. It remains possible in some cities, like Atlanta, for a claimant to file in person at a GDOL office. But any worker with internet access can file their claim online by heading to the GDOL website and using the online forms. There are also instructions about how to proceed. One of the many instructions requires a worker to list any severance pay they received when laid off.

When the GDOL receives an initial Georgia unemployment application, they review the claim and respond with a Claim Examiner's Determination to let the worker know if they quality for unemployment benefits. They also send out a Benefit Determination that sets out the potential amount and duration of the UI benefit.

There is a range of possible payments for regular unemployment benefits starting at $55 a week and going up to $365 a week. The more a worker has earned in their work in the recent past, the higher their unemployment benefit will be. Both eligibility and the benefit amount may be supplemented by federal supplemental pandemic UI coverage. Once UI payments begin, the worker must certify their current situation on a weekly basis to continue to receive payments.

The Georgia Department of Labor requires that a claimant report all severance packages and payments they have received when they file their unemployment claim. If the worker has not received severance by the time they apply but does receive it afterwards, they must report this to the GDOL later. The severance package can restrict the eligibility of the worker for UI payments.

Remember that UI insurance benefits are intended to assist workers who are temporarily out of work or between jobs. The amount of the benefit is calibrated to the worker's earnings in the base year, as defined by the Georgia UI laws.

If the worker's former employer is continuing to pay them going forward, their need for UI benefits is reduced or eliminated. This is true whether the amount is paid out weekly for a certain number of weeks, in which case it would impact those weeks of UI, or provided in one lump sum.

How much does severance pay reduce benefits? That depends on the weekly amount of severance pay and the weekly benefit amount. If a worker is receiving weekly severance payments that are more than the weekly UI benefits they are eligible for, they will not be able to claim any UI benefits until their severance package is paid in full.

What about a lump sum severance package received from a layoff? The GDOL divides a lump sum by the worker's average weekly salary to calculate the impact on UI benefits. If, for example, the severance package was 10 times the amount of the worker's average weekly earnings, the worker would have to wait 10 weeks before they can start collecting unemployment benefits.

As coronavirus hit this country, businesses were shut down and workers laid off for months to prevent community spread. To assist workers in this situation, the federal government enacted the CARES Act, expanding employment eligibility for those who lost work due to COVID-19, providing supplemental payments and extending the duration of those payments.

The initial law, enacted on March 27, 2020, provided unemployed workers with supplemental unemployment payments on top of their state unemployment benefits if they lost their job or had their hours reduced due to COVID-19 issues. This Federal Pandemic Unemployment Compensation (FPUC) provided an additional $600 per week. The program ran through July 31, 2020.

Between July 31, 2020 and the week beginning on December 26, 2020, Georgians out of work could collect only the amounts available from the GDOL, that is, between $55 and $365 a week. But in December, 2020, Congress changed and extended the FPUC as part of the Continued Assistance Act (CAA) that was included in the Consolidated Appropriations Act of 2021.

The amended FPUC offers a supplemental weekly amount of unemployment insurance of $300 on top of the state benefits starting the week ending January 2, 2021. These payments are set to continue through March 14, 2021, although pending legislation may expand the duration.

It may seem as if these federal supplemental unemployment insurance benefit programs might impact the effect of severance payments on UI claims. However, that is not the case. The federal benefits supplement regular benefits, but they are not included in the regular UI amount. Rules about the amount of income a worker can receive and still qualify for UI are not changed by the federal law.

For example, if an unemployed Georgia worker is eligible for $150 a week of regular UI benefits, they may also be eligible for the supplemental amount, currently $300 a week. But if they receive weekly severance installments of $150 or more, they are not eligible for either the UI benefits or the supplemental benefits.