A. Md. LABOR AND EMPLOYMENT Code Ann.
§ 8-1009 (2010)
§ 8-1009. Severance pay
(a) Dismissal payments or wages in lieu of notice. --
(1) For each week that the Secretary finds an individual who otherwise
is eligible for benefits receives or is eligible to receive dismissal
payment or wages in lieu of notice, regardless of whether the payment
is required by law:
(i) if the payment at least equals the individual's weekly benefit
amount, the individual is disqualified from receiving benefits; or
(ii) if the payment is less than the individual's weekly benefit
amount, the individual may receive benefits reduced by the amount of the payment.
(2) Dismissal payment or wages in lieu of notice shall be allocated
to a number of weeks following separation from employment that equals
the number of weeks of wages received.
(b) Military disability severance payments. -- An individual who is
otherwise eligible for benefits, including benefits payable under
the Unemployment Compensation for Ex-Service Members Program in accordance
with 5 U.S.C. § 8521 may receive benefits, and the benefits
may not be reduced under subsection (a)(2) of this section, for each
week that the Secretary finds that the individual receives or is eligible
to receive military disability severance payments.
B. Extent of Disqualification
The claimant was discharged on December 31, 1989. The employer
gave him severance pay in the amount of $1,923. His weekly wage
with the employer was $961.54. COMAR 09.32.02.13B(2) states
that the formula for allocation of dismissal payments shall
be to divide the weekly wage of the individual by seven and
apply the quotient for each calendar day following payment.
Applying this formula, the quotient is $137.36 ($961.54 divided
by 7); the severance pay therefore covers a period of 14 days
($1,923 divided by $137.36), from January 1, 1990 up to and
including January 14, 1990. The claimant is totally disqualified
from receiving benefits for the weeks ending January 6, 1990
and January 13, 1990. For the week ending January 20, 1990,
a deduction of $137 (rounded off from $137.36) for wages paid
for January 14, 1990, should be made from his weekly benefit
amount of $205. Harkins v. Fullerton Supply Company, Inc., 808-BH-90.
In determining the claimant's weekly pay, the claimant's commissions,
as well as her salary, should have been counted. Since the claimant
earned $17,000 total remuneration for ten months' work, her
total weekly remuneration (salary and commission) averaged $395
per week. The severance pay received by the claimant equals
only one week's pay. Since the claimant received only one week's
pay, she should be disqualified for only the one week immediately
following separation. The fact that she received the severance
pay in two separate checks is irrelevant. Jenkins v. Manning
Broadcasting, Inc., 290-BR-91.
The Board ruled the claimant received a severance amount
which equaled wages for a 14 day (2 week) period. However, the
plain and ordinary meaning of "week" is 7 days. The Board found
that "the same wage amount . . . that an individual received
while employed" is limited to an amount equaling payment for
services for "each week" (7 days) of services provided. This
case addresses severance calculations involving a 24 pay-per-year
basis instead of the traditional 26 pay-per-year basis.
Howe v. DeCaro, Jeffrey, et al., 0-BR-00 (2002)
C. Payments Which Constitute Severance Pay
At the time of her layoff, the claimant was paid a lump sum
"nonvested pension;" this amount was obtained from a special
employer fund for "closing costs" and was intended to provide
additional severance pay to certain employees who did not have
vested pension rights. The lump sum is properly considered severance
pay under Section 8-1009 and not a pension, annuity, retirement
or retired pay under Section 8-1008. The money was not obtained
from a pension fund and was intended as additional severance
pay to those employees, including the claimant, who lost their
opportunities to gain vested pension rights due to the closing
of the store. Carey v. Stewart and Company, 717-BH-83.
Payment made to the claimant as part of an agreement with the
employer to end the claimant's employment contract is dismissal
pay or wages in lieu of notice. The employer had the right under
the terms of the contract to terminate the claimant's services
for "unsatisfactory performance." These facts are distinguishable
from those in the Board precedent, Bohager v. Waste Management,
Inc., 522-BH-85. (See below). In Bohager, the employer
did not have contractual grounds to terminate the claimant's
employment; the payment was made in consideration of cancellation
of the contract. In this case, however, the employer's decision
to terminate the claimant was within the provisions of the contract;
thus, the payment made was wages in lieu of notice. Riall
v. Town of Berlin, 226-BH-93.
D. Payments Which Do Not Constitute Severance Pay
The employer prematurely terminated the claimant's services
under a written three-year contract of employment. The contract
itself did not provide for dismissal payments, but the claimant
negotiated with the employer and received a $50,000 payment
in return for early cancellation of the contract and a change
in the noncompetition clause of the contract. This payment constitutes
consideration for both the cancellation of the contract and
the noncompetition clause and is not wages in lieu of notice
or a dismissal payment. The $50,000 received is thus not deductible
under Section 8-1009. Bohager v. Waste Management, Inc., 522-BH-85.
Neither party was absolutely certain whether the two checks
the claimant received were severance pay, pay for past work
or payments made to remunerate the claimant for commissions
already earned but not yet paid. Since the employer had control
of the records, it is appropriate to place the burden on the
employer to demonstrate that the payments were severance pay.
Since the employer did not meet its burden with enough evidence
to find that the payments were severance pay, the payments were
not deductible from benefits. Wilkerson v. Closet Crafters, Inc., 1105-BR-89.