Can I get Kentucky Unemployment Benefits if I get Severance Pay?

When a job unexpectedly ends, most people are left wondering how they’re going to pay the bills. Fortunately, Kentucky has a system in place that provides unemployment insurance benefits to to workers who have lost their job due to no fault of their own.

Some workers in Kentucky are also fortunate to be offered severance pay by their former employer when a job ends. To learn more about Severance Pay and Severance Agreements in Kentucky, go here Kentucky Severance Agreement Review and Negotiation and here Am I Entitled to Severance Pay?

Our clients who do receive severance pay at the end of a job often end up asking us the same question:

Is the amount I receive in severance pay deducted from unemployment benefits or can it disqualify me from receiving unemployment benefits at all? The short answer to both questions is: NO.

Generally, if you earn wages during the period that you are receiving unemployment benefits, your befits can be reduced. But is severance pay considered “wages” for the purposes of unemployment benefits in Kentucky. Again, the short answer, according to Kentucky courts and the Kentucky Unemployment Insurance Commission, the answer is no.[1]See, Unemployment Insurance Rights and Responsibilities, P. 9. According to the Unemployment Commission, severance payments are neither deductible nor disqualifying wages for weeks following separation. The Commission has treated earned vacation pay paid out at termination in the same way, i.e. it is not a disqualifying or deductible wage for purposes of benefits.

However, if you’re confused as to whether a payment you receive at the end of your employment is considered “severance pay” by the Kentucky Unemployment Insurance Commission, contact the Employment Law attorneys at Abney Law and schedule a free consultation today. And remember, failure to properly report wages and income to the Unemployment Commission can result in serious penalties, disqualification from benefits, repayment requirements, and, in some cases, criminal prosecution.