I’m getting severance pay. Can I still file for unemployment?

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Q. After 36 years of continuous service, my job was eliminated on Jan. 15, 2022. My severance has been set up to be paid in two lump installments. I received the first half on Feb. 21 and the second installment will be in February 2023. Do I need to wait to apply for unemployment because I am waiting for the second severance payment? If I do, would I qualify for unemployment after that time?
— Unsure

A. We’re sorry to hear your job was eliminated.

Exactly how your severance is classified is important here.

New Jersey does not consider severance pay to be income when calculating whether or not a person should be able to receive unemployment benefits, said Joseph Sarnecki, a certified financial planner with U.S. Financial Services in Fairfield.

But you have to make sure the payments are considered severance and not a continuation of employment with the firm, he said.

“If the payments are being made through their payroll system, the state may consider you to still be on the company’s active payroll and delay your ability to receive benefits,” he said. “If it is considered `continuation of salary,’ you would have to wait until the payments have been completed before collecting.”

If that’s the case, it may be worth a conversation to see if your former employer can pay the second installment sooner, Sarnecki said.

“The best course of action may be to put in your unemployment application and follow up to discuss the specifics of your situation once it is processed,” he said.

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This story was originally published on April 5, 2022.

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