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socrateaser
socrateaser, Lawyer
Category: California Employment Law
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Experience:  Retired (mostly)
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I was laid off in September 2011, I received partial 2011 bonus

Customer Question

I was laid off in September 2011, I received partial 2011 bonus in March 2012. I also receive most part of my severance pay in Jan. 2012. To claim my unemployment from september 2012 - september 2013, should I be able to use the severance and bonus as 'Wages" earned in 2012? I was originally granted the unemployment claim, but just received the 'audit' to exclude my severance pay for 2012 and reallocated my bonus to 2011. Is this legal? Should I call the auditor or just send in the appeal? Please help! This will impact my one year of unemployment claim. Thank you.
Submitted: 2 years ago.
Category: California Employment Law
Expert:  socrateaser replied 2 years ago.
Hello,

I will be happy to address your question -- however, please understand that I don't make the law, and I am not trying to make things difficult for you. Sometimes, where the law does not support your unique circumstances, the best that I can do is to explain what the law is or is not.

That said, dismissal and severance pay received by employees from employer upon termination of employment is not “wages” for unemployment compensation purposes within Unemployment Insurance Code provision that payments under plan established by employer for purpose of supplementing unemployment compensation benefit shall not be construed to be “wages." See UI Code, §§ 1251, 1252, 1265; Powell v. California Department of Employment (1965) 63 Cal.2d 103.

So, the severance is off the table -- you can't use it to support a new claim.

The bonus may be a different matter, but I see some associated risk for you.

UI Code § 926 specifically includes bonuses within the definition of wages. See Los Angeles Turf Club, Inc. v. Unemp. Ins. Appeals Board (1981)
117 Cal.App.3d 454. And, UI Code § 1275 provides: “Unemployment compensation benefit award computations shall be based on wages paid in the base period." Kerin v. Unemp. Ins. Appeals Board (1978) 87 Cal.App.3d 146.

Based upon the above, if you argue that you are entitled to have your bonus payments considered as part of your 2012 wages, then if you were paid unemployment benefits during that same period, then you will be required to pay back the value of the bonus to EDD as an overpayment.

So, if your overpayment isn't worth the value of your new claim, then maybe you want to appeal the decision. But, if you win, you will have to repay your bonus to EDD to the extent that it replaced UI benefits.

Hope this helps.

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Customer: replied 2 years ago.

"To Socrateaser" - Thank you for your expertise answer. How would this 'wage adjustment' impact my Unemployment insurance award? My claim is for 09/2012 - 09/2013. Even the audit took away my Dec 2011 & Mar 2012 wages and lowered my highest quarter earnings, but with Jun 2011 & Sep 2011 I still have wages added up to 62,507.67,my maximum benefit amount is still the same $11,700 for 09/2012-09/2013. Does the insurance award based on each quarter or the past 4 quarters. Am I safe to receive benefit up to 11,700? (weekly $450)? Thanks a lot!

Expert:  socrateaser replied 2 years ago.
The claim is based on the first four calendar quarters of the last five calender quarters ending in the calendar quarter before the date of your benefit claim. If you were originally laid off in Sept. 2011 (3rd calendar quarter), then your benefits would be based upon earnings for the four calendar quarters ending June 30, 2011.

As far as what your new calculation may be, I can't run your numbers -- I'm a lawyer, not an accountant, and I'll just screw up the calcuations.Cool I hope you understand.

socrateaser, Lawyer
Satisfied Customers: 34636
Experience: Retired (mostly)
socrateaser and 3 other California Employment Law Specialists are ready to help you
Customer: replied 2 years ago.

"To Socrateaser" Just received one notice with 'Determination of invalid claim, section 1277', siting I have not received wages during 9/18/11-9/15/12, hence my new claim was denied.


 


Conflictingly also received an 'amended unemployment insurance award' with weekly benefit amount of $450, based on the 4 quarters wages (have wages on Jun & Sept 2011 quarters, but not Dec. Mar.2012 quarters). Sept 2011 I have wages, but not after 9/18/2011.


 


With the invalid claim, the insurance award most likely would not happen. Should I then just count on my original federal extensions? I have received UI since Oct. 2011 and went thru 1 extension. On EDD website, it indicated all extension will end on 12/29/2012. Should I accept that fact or is there any action plans?

Expert:  socrateaser replied 2 years ago.
I believe that my original answer above remains valid. It's largely an accounting problem. If you successfully claim that your bonus is additional wages for a new claim, then you may have to pay back an overpayment on your old claim, because EDD has spread that bonus over prior base period quarters. If removing the bonus money does not negatively affect your original claim (because your income without the bonus will produce the maximum award), then you may want to appeal and see what the ALJ (judge) thinks.

Hope this helps.

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socrateaser
socrateaser
California Employment Lawyer
34636 Satisfied Customers
Retired (mostly)