On May 10, 2012, a bill was introduced (A2654) to disqualify individuals from receiving unemployment insurance benefits when their severance payments significantly exceed the average annual pay for all workers in the state. The bill would establish a complex calculation by which the statewide annual wage would be subtracted from the total amount of severance pay paid or payable to the employee, resulting in the “amount of severance pay attributed to the individual.” For any week in which any severance pay is attributable to an individual, no unemployment benefits would be available. The number of weeks to which severance could be attributable to an individual would be based upon an additional calculation: dividing the amount of severance pay attributed to the individual by the portion of the average weekly wage of the individual which does not exceed the statewide average weekly wage, rounded to the nearest full week.

A similar bill (A2443) was introduced by the Assembly in late February. Generally speaking, that bill would reduce the amount of unemployment insurance benefits payable by an amount equal to the amount of severance pay received by the individual in a given week. For lump sum severance payments, it would be reduced by dividing the total lump sum by the number of weeks of unemployment.


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