Does a Severance Package Affect Unemployment Benefits in Kentucky?

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The Kentucky Revised Statutes Section 341.00 is the Kentucky Unemployment Law. According to the commonwealth of Kentucky’s statutory code, a claimant’s benefits may be reduced if he receives wages during his unemployment. Under Kentucky law, severance packages can affect a claimant’s unemployment benefits.

In Kentucky, a claimant must file a weekly claim for benefits within two weeks of the state’s prescribed date, determined by the Office of Employment and Training. Benefit amounts capped annually by state law, but each year, claimants must receive at least $39. For 2011, the maximum weekly amount claimants can receive is $415. The state bases the amount of benefits approved applicants receive on their earnings and employment history. To receive benefits, Kentucky requires that applicants are unemployed without fault. Although many states require claimants to serve a waiting week before receiving benefits, Kentucky does not impose a waiting period.

Initial Determination

The Kentucky Office of Employment and Training is responsible for administering the state’s benefits, and once applicants submit their initial application for benefits, the state will issue a “Monetary Determination” for eligibility. Claimants must actively search for full-time employment and must be physically and mentally able to work and accept work. In addition to being able and available to work, the state requires applicants to include their wages received each week they file for unemployment benefits, limited to 26 weeks.


Earnings reportable as unemployment income include regular compensation, vacation pay and holiday pay. Wages also include self-employment income and military drill compensation. During layoff, claimants must report weekly wages as earned, not paid. The state considers failure to report received wages as filing fraud. Under Kentucky law, the state does not deduct severance pay, and claimants do not have to report their severance earnings.


As stated, unemployed claimants can keep all of their severance earnings, but their employers must report their earnings as severance pay. Earnings paid for unused holiday, vacation and personal leave do not qualify as severance, and claimants must report that income as earnings. They may not fraudulently claim those earnings as “severance pay” to escape their reporting duties. Additionally, the state does not require claimants to accept work that is significantly different from their training and skills. Additionally, unemployed workers do not have to accept jobs that pay much less than what jobs in their traditional field of employment pay.


Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.