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3 Things You Should Know About Illinois Severance Pay

March 11, 2022

Losing your job can be a confusing time.  If you’re fortunate enough to receive severance pay, here are 3 legal terms you should pay attention to when reviewing your severance agreement terms and conditions.

(1) Unemployment Benefits and Severance Pay:  In most states, you can collect unemployment benefits only if it’s the employer’s fault you lost your job.  For example, if your company can’t afford to pay you anymore or doesn’t like how you perform your job, the unemployment office will likely determine you are eligible to collect benefits as long as you are able and available to start a new job.  Sometimes employers will try to limit your collection of unemployment benefits in a severance agreement by writing a clause that states “You agree not to collect unemployment benefits while you are receiving severance pay”.  Terms that limit your ability to collect unemployment benefits, even if you don’t think you need the benefits, should be challenged.

*In Illinois, you can collect severance pay and unemployment benefits simultaneously.   According to Section 2920.45, amounts paid or payable to the individual as severance pay shall not render the individual ineligible to receive benefits under Section 2920.5.  The nature and purpose of such payments, rather than their characterization, shall determine whether or not such payments are considered severance pay under this Section.

(2) Severance Payment Deadlines:  When will you get your severance pay?  By when do you have to sign off on the terms and conditions?  When you lose your main source of income, you might prefer a lump sum payment rather than severance pay paid out as continuing payroll.  Read carefully to understand if your agreement contains a 7-day revocation period (usually for employees over age 40) and how soon the pay will be given to you.   Also, if you need more time, consider hiring an employment lawyer who can help you understand the terms, and who can negotiate the terms if need be.

(3)  Confidentiality:  Who can you tell about the severance pay?  Your boyfriend?  Your Mom?  Your sister?   Most severance agreements allow for you to share the terms of the severance pay with your spouse, your attorney, your accountant and government officials (during investigations).  That’s it.  If you want to share the news with others, be very careful and make sure the folks who need to know are allowed to know.

Pietrucha Law Firm, LLC helps employees and employers navigate employment relationships, including severance terms.  We can write, review and negotiate severance terms.  Feel free to contact us for more information about our severance services.

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