Total and Partial Unemployment TPU 460.62

Extended Layoff Benefits/Supplemental Unemployment Benefits

Some employment contracts call for supplemental benefits paid for the purpose of augmenting the claimant’s unemployment insurance benefits. Such payments are not wages and do not render the claimant ineligible under Section 1279.

Section 1265 defines these benefits as follows:

"Notwithstanding any other provisions of this division, payments to an individual under a plan or system established by an employer which makes provisions for his employees generally, or for a class or group of employees, for the purpose of supplementing unemployment compensation benefits shall not be construed to be wages or compensation for personal services under this division and benefits payable under this division shall not be denied or reduced because of the receipt of payments under such arrangements or plans."

Payments designated by various names may come within the broad scope of Section 1265. Consequently, when a question arises as to the nature of a payment under an employer benefit plan, it must be determined if the payment is for the purpose of supplementing unemployment insurance benefits and whether it was made in accordance with an established plan or system. If so, the plan comes with the scope of Section 1265 and the claimant is not employed while in receipt of such payment.

Such was the ruling in Attorney General Opinion 61/18 concerning the severance pay arrangement between General Electric and the union. In this case, the contract agreement provided for a system of "Benefits Available at Layoff" and "Benefits Available at Plant closing."

In holding that payments under this plan fall within the meaning of Section 1265, and thus are not reportable wages for UI purposes, the Attorney General stated:

"Both the ‘Benefits Available at Layoff’ and the ‘Benefits Available at Plant Closing’ are available only to workers who are laid off. Both are designed to ease the burden placed upon employees by involuntary unemployment. Thus, the benefits do either fill a ‘deficiency’ in the statutory scheme or ‘reinforce’ or add to the aid available to an employee during a period of involuntary unemployment. It is apparent therefore that the ‘Benefits Available at Layoff’ and ‘Benefits Available at Plant Closing’ are supplementary to Unemployment Compensation Benefits within the meaning of the statutory phrase.

Accordingly . . . payments made should not be considered for the purpose of computing awards, and statutory benefits should not be denied or reduced because of the receipt of benefits from the company."

  1. Extended Layoff Benefits

    Extended layoff benefits are another type of payment considered as a supplement to unemployment insurance benefits. Such payments are not wages for benefit eligibility purposes and they do not render the claimant ineligible under Section 1279.

    Extended layoff benefits are distinguished from severance payments in that the claimant is still considered as an employee on a temporary layoff. The benefits are paid to eligible employees who are laid off as a result of a reduction in the working force, and who have not bee rehired within a predesignated period of time. The payment is made in a lump sum and is payable even if the employee is working for another employer.

    For example:

    The employer’s contract with the union provides for a layoff benefit of $50 for each full year of continuous employment up to a maximum of 10 years. This payment is made if the employee’s layoff exceeds four weeks. At the end of the fourth week an employee with 5 continuous years of service would receive $250. This amount would not be considered wages if UI benefits are claimed for the week of receipt.

  2. Furlough Payments

    Contracts between the Air Lines Pilots Association and various air line companies commonly provide for payments which are designated as Furlough Pay.

    Such payments are made under a seniority plan established by the employer when a pilot is furloughed due to a reduction in force. As the plan contains no language to the contrary, severance payments made pursuant to a plan for the purpose of supplementing unemployment benefits are not wages. Thus furlough payments received under such a plan are not wages for benefit eligibility purposes.

    Contracts with other categories of airline employees, i.e., flight attendants, mechanics, etc., may also provide for the payment of Furlough Pay under similar contract language. Such furlough payments would also not be considered wages for UI purposes.

  3. Jury Duty Pay Plan

    Certain labor organizations have contract provisions which provide for a member who is on a jury duty during a period of layoff, to receive the regular wage less the jury duty pay and UI benefits. This pay has been determined to be a supplemental benefit within the scope of Section 1265. Therefore, it is not wages.

Last Revised: 01/14/2022