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Quitting for severance bars unemployment benefits

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in Compensation and Benefits,Human Resources

Workers who quit their jobs and take a severance payment in ex­­change for dropping a potential lawsuit weren’t “forced” to quit because of something their employers did to make remaining employed impossible. They, therefore, aren’t eligible for unemployment compensation payments.

Recent case: Charlotte took a job as an IT manager for a salary of $90,000. Soon, she began raising concerns about proper intellectual property ownership. The company investigated her allegations and concluded they were unfounded.

It then offered her a severance payment of $45,000 if she would quit. She accepted the offer and applied for unemployment benefits.

The company argued she was not eligible because she had voluntarily quit. She argued that she had no choice but to quit or engage in unethical be­­havior. The court disagreed. (Smith v. Health Partners, Court of Appeals of Minnesota, 2017)

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