severance pay
 

Hello to all:

I have been on a leave of absence for the past 16 months. My employer told me they can't hold my job any longer. They offered me severance pay equal to 3 months pay minus income taxes and other deductions such as FICA and Medicare.

How will this impact my back pay amount, assuming I get approved for SSDI? I applied last May and am waiting for the first decision.

When I called a Social Security Disability Attorney, The person answering the phone said that serverance pay is not considered wages, so that my back pay won't be impacted by the serverance pay. My employer disagrees.

Has anyone had experience with serverance pay and the impact on his/her benefits?

Many thanks to all and to all a great night!

Pokeno from California

I received 4 weeks vacation pay (after I stopped working) and it wasn't effected. The judge was informed about it.

You should consider having an attorney review the agreement...I know in the past at least, in Ventura that there was first come, first serve, free legal help provided at the county government center. Check to see if there is a similar service in your county. Or, you might be able to negotiate to have your employer pay a small legal fee on your behalf.

Here's my concern, if the agreement is written correctly, there will be no potential for an SSDI offset. But, if your employer is saying this money is subject to FICA--then you might have an issue.

Please read this link:

http://www.outtengolden.com/files/Ne...Agreements.pdf
Pay particular attention to page 5:
"Amounts received as compensation for interest, emotional distress, or punitive damages, though subject to income taxes, are not wages for purposes of FICA and other payroll taxes and contributions. Similarly, an amount paid as consideration for cancellation of a fixed-term employment agreement is not considered wages. Thus, for amounts allocated to such non-wage categories, the employer and employee can each save 7.65% on income up to $84,900 for 2002 (subject, of course, to the effect of other wages during the year), plus 1.45% beyond that amount."

You didn't apply for CA state disability?