Laid Off Workers Concerned New Law Delaying Unemployment Benefits

By: Jason Tarr Email
By: Jason Tarr Email

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Thursday, September 5, 2013

Her money has almost run out.

Debbie Morgan has barely any funds left to use to pay for her diabetes medication or to fix her water heater.

"$37.86. That's it," Morgan said.

After working for Spirit for 27 and a half years, Morgan was notified in July she would be laid off August 8th.

Morgan says she knew she would have to wait to receive her severance package, but she didn't know she would have to wait weeks, even months to receive her unemployment.

"The reality is sinking in of, 'You are really not going to see another dime until that severance package kicks in September 20th or September 25th,'" Morgan said.

She says she's not frustrated with Spirit. She's upset with Kansas state government.

She believes a new law that went into effect July 1st has put her in this precarious financial position.

"I'm scared," Morgan said.

The law she's referring to is part of a comprehensive unemployment insurance reform bill (HB 2105) that was approved by the state legislature and signed by the governor earlier this year.

The Department of Labor says the old law had a discrepancy in how severance pay was handled in relation to unemployment benefits.

If an employee was laid off and their severance was paid out over time, they would not be eligible to receive unemployment insurance payments until the severance expired. Meanwhile, if an employee was laid off and their severance was paid out in a lump sum, they would be able to receive unemployment immediately. In other words, they'd be receiving unemployment and severance income at the same time.

Under the new law, regardless if the severance is paid as a lump sum or over time, unemployment benefits don't kick in until severance pay has run out.

The Department of Labor says the change does not affect how long someone will receive unemployment. It may affect when they start to receive that benefit.

As a result, Morgan believes, she is receiving no money as she waits for her severance package to kick in and will likely have to use her severance money to make ends meet.

"Severance was always designed to help a family transition into the next stage of their lives and careers and now they're having to use it to fund their unemployment. It's absolutely insane," said Bob Brewer, SPEEA Midwest Director.

But Eric Stafford of the Kansas Chamber of Commerce says the change in law helps to restore the system back to its original purpose and make it consistent.

He says it also addresses the employer tax side, specifically the $90 million tax increase coming in 2015.

Morgan says while that may be true, she believes the Spirit layoffs are the first major test of the new law. She says the issue she's having may show that the state, "didn't think the (legislation) through."

As a possibly a further delay, Morgan says she was told by someone at the unemployment office that unemployment is frozen for all recently laid off Spirit employees while the Department of Labor waits on information from Spirit.

Representatives from Spirit and the Department of Labor say they are unaware of any such situation.

Morgan says she would like more information and would like some answers. Without them, she worries what the new law may mean for the workers who just learned of layoffs August 29th.

"It's a double whammy knowing that it (could) be happening to others and they don't even know," Morgan said. "I just wish somebody in the state would back up and look at what's happening."

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