Help Wanted: Pay cut may not be fair, but likely legal

-- Salary Cut

I'm sure the reduction doesn't seem fair to you because in this age of lean staffing, employees are asked to do more, while in many cases earning less. But labor laws are concerned with what is "legal," and that doesn't always translate into what is "fair."

-- Separation Anxiety

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While you plan to wait to file for benefits, the Labor Department requires laid-off workers to file a claim the first week they're unemployed, said Howard M. Wexler, an employment attorney at Seyfarth Shaw in Manhattan who represents employers. Otherwise, they could lose benefits.

You may not qualify for the benefits now because of your severance package. But at least you would have filed.

Here's why you might be ineligible now.

"Individuals who receive severance pay from their former employer are ineligible for unemployment insurance benefits," Wexler said, "if they continue to receive their full salary and exactly the same benefits they received during their employment and if receipt of such benefits will cease if they find work elsewhere," Wexler said.

That's because the state Labor Department takes the position that an individual is not "ready, willing, and able to work -- a condition of receiving unemployment insurance benefits -- if they are receiving severance benefits that cease if the individual finds new employment," Wexler said.

He noted that payments for paid-time off such as unused vacation, sick and personal days generally don't affect a worker's eligibility for unemployment benefits.

It's worth mentioning that a worker would be ineligible for unemployment benefits if the person signed a severance agreement acknowledging that he or she left a job on his or her own or was terminated "without good cause," Wexler said.

"Then it is possible that you could be deemed to have abandoned your job, and thus, are ineligible for unemployment insurance benefits," he said.

That doesn't seem to be the case here, since your job was eliminated.

For more on when to file for unemployment benefits and what the eligibility criteria are, go to http://bit.ly/ZM39Wd