Should I Wait for Severance to End to File for Texas Unemployment?
Navigate Texas unemployment benefits with severance pay. Discover how your agreement affects eligibility and the optimal timing for your claim.
Unemployment benefits in Texas provide temporary financial assistance to individuals out of work. Many wonder how severance pay affects their eligibility.
Understanding Severance Pay in Texas
Severance pay is a payment an employer may provide to an employee upon termination, which is separate from accrued wages or unused vacation time. The Texas Workforce Commission (TWC) assesses the severance pay to determine its impact on unemployment benefit eligibility. Employers are required to report any severance pay to the TWC when an unemployment claim is filed.
The TWC differentiates between severance pay that is allocated to a specific period and a lump sum payment that is not. If severance pay is designated as “wages in lieu of notice” or “termination pay” and allocated over a particular timeframe, the TWC may consider an individual to be receiving wages during that period. This means that during the weeks or months covered by the severance, unemployment benefits might be delayed or reduced.
Not all severance payments affect unemployment benefits in the same way. Severance received as a settlement for a legal claim against an employer, such as for employment discrimination or wrongful termination, generally does not disqualify an individual. Severance agreed upon in a pre-existing contract, like an offer letter, may also be treated differently. The TWC considers these specific terms.
Texas Unemployment Benefit Eligibility
To qualify for unemployment benefits in Texas, individuals must meet several conditions established by the Texas Workforce Commission. A primary requirement is that an individual must be unemployed or working reduced hours through no fault of their own. This includes layoffs or reductions in hours or wages not related to misconduct.
Applicants must also demonstrate a sufficient earning history during a specific timeframe called the “base period.” The base period is generally defined as the first four of the last five completed calendar quarters before the effective date of an initial claim. To have a payable claim, an individual must have earned wages in at least two of the four base period calendar quarters, and their total base period wages must be at least 37 times their weekly benefit amount.
Beyond earning requirements, individuals must be able and available for work. This means they must be capable of performing suitable work and ready to accept a job offer. Claimants must also actively seek work and register for work search.
Timing Your Unemployment Claim with Severance in Texas
The Texas Workforce Commission (TWC) has a “waiting week” rule. The first payable week of benefits is not paid until certain conditions are met, typically after an individual has received two full weekly payments or exhausted their unemployment benefits.
Severance pay, especially if allocated by the employer to cover a specific period, can directly impact when unemployment benefits begin. If the TWC determines severance pay covers a certain number of weeks, benefits may be delayed until that period ends. During this time, the individual is considered to be receiving wages. For example, if severance covers 10 weeks of pay, unemployment benefits might not begin until after those 10 weeks.
It is important to report all severance pay to the TWC when filing an initial claim, regardless of whether it is a lump sum or allocated over time. Failure to accurately report this income can lead to penalties and overpayments that must be repaid. While some consider waiting until severance ends, filing promptly allows the TWC to determine how severance affects eligibility and advise on the effective start date for benefits.
The Texas Unemployment Claim Process
After understanding how severance pay can interact with eligibility, initiating a claim for unemployment benefits with the Texas Workforce Commission (TWC) involves specific procedural steps. Individuals can file a claim online through the TWC’s Unemployment Benefits Services website or by calling a Tele-Center. Filing online is often the most efficient method.
When submitting an application, individuals will need to provide various pieces of information. This includes their Social Security number, a valid Texas Driver License or state Identification Card number, and detailed information about their last employer. This employer information encompasses the business name, address, phone number, and the first and last dates of employment. If any work was performed in the week of application, the number of hours worked and pay rate for that week are also required.
Once the claim is filed, the TWC begins a review process, which may involve contacting the former employer to verify the reason for separation and past wages. Individuals should be prepared to explain how they became unemployed, especially if the separation was not a simple layoff. The TWC may also conduct an interview if there are questions regarding eligibility or the circumstances of job loss. Promptly responding to all TWC communications is important to avoid delays in benefit determination.
To maintain eligibility after filing, claimants must register for work search on WorkInTexas.com within three business days of applying for benefits. This is a separate step from the initial application. Individuals are required to actively search for work, completing a minimum number of work search activities each week as determined by their local Workforce Development Board. Maintaining a detailed work search log, which includes dates, types of activities, and contact information, is mandatory, as the TWC may request this log at any time during the benefit year.