[CA] How should severance pay and paid-out PTO be reported when filing for unemployment benefits?

I understand that navigating unemployment claims can be stressful, especially after termination. Have you already received your severance pay, and if so, when did you receive it?

Were you employed full-time or part-time at the time of your termination?

Is there anything else the Employment Lawyer should know before I connect you? Rest assured they'll be able to help with your unemployment filing.

Hi there!  My name is Liz and I've been an attorney for more than a decade, and I am here to assist with your legal concerns. No attorney-client relationship is formed from our conversation. So I can best help, in what state would you be seeking unemployment?

Understood. That means you'll be filing with the Employment Development Department (EDD). You can apply online or via phone. Were you terminated through no fault of your own?

Got it, thanks for sharing that. Did the severance mention unemployment?

With it being performance, was it just not meeting metrics?

That is not considered being terminated for cause that would block unemployment. For cause in that case would require something like intentional insubordination.

For EDD purposes, your "last day worked" is typically the last day you performed work duties, which in your case would be February 11. Since you were on payroll until March 20 but not actively working, February 11 is the date to report. Regarding in-lieu-of-notice pay, this usually applies if you were paid for a notice period without working. Since you were on payroll with benefits until March 20, it seems like you were given notice, not in-lieu-of-notice pay. In California, severance pay is not considered "wages" for unemployment purposes (Unemployment Insurance Code § 1265). Since you received it as a lump sum and not tied to a specific period of work, you generally do not report it as wages. Does that all make sense?

Exactly, you've got it! You should report February 11 as your last day worked. Since you didn't actually work between February 11 and March 20, you don't report wages for that period. Also, you don't need to report in-lieu-of-notice pay or severance pay.

Paid-out PTO is considered earned wages, so you should report it when filing your claim.

Could I see a screenshot? Normally you would report earned wages.

That works.

Take your time, I'm here when you're ready.

Oh! So in that case, they mean specifically only wages. So you'd click for the PTO and the severance as their own boxes.

Yes, you would report the severance and paid-out PTO on the dates you received them. For the last day worked, you should report February 11, as that's the last day you performed work duties. The wages you received until March 20 are not considered "wages for work" since you weren't actively working, so you don't report them as such.

This tracks the statutory framework for unemployment eligibility: a claimant is "unemployed" in any week in which no services are performed and no wages are payable (Unemployment Insurance Code § 1252), and payments like severance made under a separation plan are excluded from the definition of "wages" for unemployment purposes (CA Unemp Ins Code § 1265), a rule the California Supreme Court confirmed in Powell v. California Unemployment Insurance Appeals Board (63 Cal. 2d 103 (1965)). Paid-out PTO, by contrast, reflects wages already earned for work performed and is generally treated as reportable income when filing.

You're very welcome.