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Severance Payment Plan Can Put Jobless Benefits on Hold

November 05, 2001

Question: The company I work for has advised all employees that some of us will be laid off because of a restructuring. The severance package will include one month of pay per year of service to a maximum of 18 months.

We were told we can draw this severance pay all at once or take it on a month-to-month basis.

How will this affect unemployment benefits? I was told you cannot collect unemployment until the severance pay runs out, even if you take it all at one time.

--E.O., Chatsworth

Answer: Because unemployment compensation was created to help replace the wages of people who have lost jobs, you might not be entitled to this compensation while receiving severance pay.

Some employers even regard the date of your last severance payment as your final day of employment, even though you might have stopped working long before.

You improve your chances of receiving unemployment compensation sooner if you take the severance pay all at once. Your case would be even stronger if part of the severance amount is for non-wage items, such as compensation in exchange for your agreement to waive claims you might have against the company for discrimination or other issues.

By receiving a lump-sum payment, you avoid the possibility that the company might stop payments prematurely because of financial problems. An immediate payment also provides money for your own financial needs, such as investing in further education or a job search.

There are some advantages to stretching out severance payments, however. Your tax burden might be less if the payments are extended into another tax year. Your health insurance or pension plan contributions also might be continued for the duration of your severance payments.

You should consult with your attorney before negotiating the terms of any substantial severance pay arrangement, especially if your employer also seeks a release of your rights.

Don D. Sessions

Employee rights attorney

Mission Viejo

Firm Not Required to Have Drinking Water

Q: At the fast-food restaurant where I work, my boss recently removed the water fountain, saying he needed the space for storage shelves. We now have no access to drinking water.

Is this legal?

--R.T., Los Angeles

A: An employer is not required to provide employees with water or food. However, an employer would be well advised to provide for basic necessities such as drinking water to keep employee morale at a reasonable level.

Michael A. Hood

Employment law attorney

Paul, Hastings, Janofsky & Walker

Layoff May Be Allowed During Medical Leave

Q: If I am under a doctor's care and have not been cleared to work, can I be laid off?

S.A., Orange

A: It is difficult to answer your question with the limited facts you have provided. As a general rule, an employer may not discriminate against an employee who has a disability or who has suffered a work-related injury.

In addition, depending on the size of your employer, your length of service with the employer and the nature of your illness, you may be eligible to take a family and medical leave and return to your old job once your doctor releases you.

However, the family and medical leave laws apply only to employers with 50 or more employees within 75 miles of the place where you work. To qualify, you also must have a serious health condition as defined in the laws and have worked for the employer for at least a year.

Under the discrimination laws, your employer must reasonably accommodate your disability. This term often has been interpreted to include providing an unpaid leave of absence.

However, even if you are protected under these laws, your employer may still be entitled to lay you off if it would have done so had you been working. In other words, if the business of the company has changed such that it has become necessary to eliminate the position you occupy, the company would be within its rights to lay you off.

If you believe that the decision to lay you off is motivated by the fact that you are under a doctor's care, I recommend you contact the California Department of Fair Employment and Housing or the federal Equal Employment Opportunity Commission and describe your circumstances. They can help you determine whether you have been treated illegally.

Diane J. Crumpacker

Management law attorney

Fried, Bird & Crumpacker

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If you have a question about an on-the-job situation, please mail it to Shop Talk, Los Angeles Times, P.O. Box 2008, Costa Mesa, CA 92626; dictate it to (714) 966-7873, or e-mail it to shoptalk@latimes.com. Include your initials and hometown. The Shop Talk column is designed to answer questions of general interest. It should not be construed as legal advice. Recent Shop Talk columns are available at www.latimes.com/shoptalk.

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