“If laid off and offered a lower job, will declining it result in losing severance or unemployment benefits?”
Published on May 28th, 2014 by Alan L Sklover
Question: Dear Alan: My husband was informed that his position will soon be eliminated due to restructuring following a recent company acquisition. A lower-paying position at the company was identified which is available for him to apply for, and he will be given preferential consideration for this job.
We are wondering about negative consequences of his applying for this job. What happens if (1) he fails to apply? (2) applies, and does not get it? or (3) applies, is offered the position, and declines it?
Answer: Dear Denise: Yours are common questions and ones that surely produce anxiety. Most of the answers to your questions can be best determined by inquiring to Human Resources, and to your state’s unemployment benefits agency. That said, let me do my best to provide you with the guidance to begin:
1. Severance questions are best answered by review of your employer’s Severance Plan. When employers engage in a downsizing or layoff, most have first prepared what is commonly called a Severance Plan, which is a list of the “rules and regulations of who gets paid what.” Employers do this in good part so they can prevent employees saying that they treated different people differently due to “illegal or improper reasons” such as discrimination, retaliation, or harassment.
Your first place to look for answers to your three questions about severance eligibility is your husband’s company’s severance plan. It should be available upon request from his employer’s Human Resources staff, or possibly online at his employer’s internal website.
By the way, Human Resources may direct you to a shorter, abridged version of the Severance Plan called a Summary Plan Description (or “SPD” for short.) Chances are that an SPD will not have the answers you need; request a copy of the full Severance Plan, or digital access to one.
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2. If the Severance Plan is not available, or does not exist, or does not answer your questions, your questions should be submitted to Human Resources in writing. Some employers, especially smaller employers, may not have a written Severance Plan. At times, it may be difficult to locate a copy. Sometimes it does not contain the information you seek. In any of these circumstances, your questions are best submitted to Human Resources in writing, and most especially in an email to the Head or Director of Human Resources. They should be able to provide the answers you seek.
Smaller employers may not have a Human Resources department. If that is the case, your severance-related questions should be directed to a member of Senior Management, such as the Chief Operating Officer, Office Manager, CEO or owner.
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3. A very important factor to consider – because the employer and unemployment agency will surely both consider it – is this: How “different” or “lower” is the other job that is available? Many different factors go into what consequences might flow from a laid-off employee not applying for, or not accepting, an open position. The term most often used by employers, by state unemployment agencies, and by Courts is whether the available job is “suitable employment.”
For example, an 88-year old great-grandmother who was a secretary for an oil company would almost surely not be denied severance or unemployment benefits if she declined a different job working as an oil rig construction worker. Likewise, a warehouse manager in Illinois would likely be unlikely to lose severance or unemployment benefits because he turned down an open position with the same company’s warehouse in Pakistan. Neither would be deemed “suitable employment” for severance or unemployment benefits.
On the other hand, a near identical job that paid $10 a week less, or had a smaller desk, would surely be deemed “suitable employment.”
4. Eligibility for Unemployment Benefits for someone offered a “lower” or “lower-paying” position will depend almost exclusively on whether it is deemed “suitable employment.” Suitable employment” is an imprecise term, and may be viewed quite differently by different people. It may vary from one part of the country to another, and may mean different things to different people. Factors looked to include (i) whether the employee has experience or training for the available position, (ii) how much lower the wages are, (iii) whether the hours are changed from daytime to nighttime, or vice versa, (iv) the degree of commuting required, and (v) the degree of hazardousness between the two different positions.
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5. While you have a Severance Plan and Human Resources Department to advise you as to severance, Unemployment Benefit agencies rarely, if ever, provide “advance opinions” on eligibility. Just bear in mind that, when applying for Unemployment Benefits, you have to contend with a government agency, meaning (i) a larger bureaucracy, (ii) rules that often are not followed carefully, and (iii) far less sense of personal accountability. Thus, you stand on firmer ground when depending on employer “rules and regulations” than when you put yourself before state Unemployment agencies.
On the other hand, you have an automatic right to appeal unemployment benefits denial, which often does work to the employee’s benefit.
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Hope this this is helpful. Good luck to your husband in his upcoming job transition, whatever he decides to do.
My Best to You,
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