Can I get unemployment benefits if I receive severance pay?

Yes, but your unemployment benefits may be delayed.

In a published opinion from the Minnesota Court of Appeals filed today, Menyweather v. Dept. of Employment and Economic Development, File. No. 33318420-3 (Minn. Ct. App. Dec. 7, 2015), the Court affirmed the language of Minn. Stat. 268.085, subd. 3(b):

Payments under this paragraph are applied to the period immediately following the later of the date of separation from employment or the date the applicant first becomes aware that the employer will be making a payment.  The date the payment is actually made or received, or that an applicant must agree to a release of claims, does not affect the application of this paragraph.

That is, once you become aware that you will be receiving severance pay from your employer you will be temporarily ineligible to receive unemployment benefits if the amount of the severance pay you will be getting exceeds the weekly amount of unemployment benefits.

In this case, Menyweather’s employer offered him six weeks of severance pay on the date it terminated his employment.  This was conditioned on him signing a separation agreement and release of his employment law claims.  Menyweather accepted the offer and signed the separation agreement and release that day.  A month and a half later, Menyweather received from his former employer, the lump sum payment equivalent to six weeks pay.  While he was waiting to receive the severance money, Menyweather had applied for unemployment benefits and had been receiving benefits.

The Court found that pursuant to the statute, Menyweather “became aware that the employer [would] be making a payment” of severance benefits on the date he signed the separation agreement.  Therefore, he was not eligible for benefits as of that date for a period of six weeks (the amount of his severance) and was required to pay back to the unemployment office the overpayment of benefits it had made to him.

Takeaway:  If you applied for unemployment benefits, you must then inform the unemployment office that you will be receiving severance pay from your employer (and the amount) on the date you sign the separation agreement.