Q: One of our employees resigned voluntarily, and she’s asking us for a “pink slip.” Aren’t employers required to give out pink slips only in the case of a discharge or layoff?

A: Whether the separation is voluntary or involuntary, every terminating employee must be given a separation packet that includes a UC-61 Separation Notice. (This replaces the old form UC-61, Unemployment Notice, which was commonly referred to as a pink slip.) On the Separation Notice, employers must check off one of five reasons for the separation, one of which is “voluntary leaving.” Be sure to keep a copy of the completed notice – it’s your proof not only that you gave her the notice but also that she resigned voluntarily. Voluntary resignation usually makes the employee ineligible for unemployment benefits.

Q: Our company closes for one week during July. Do we have to give separation notices to every employee?

A: Yes. Employers should give each employee a Separation Packet.

Q: Our company needs to lay off some workers. We would like to make payments to them to supplement their unemployment compensation. Is there any way we can do this without adversely affecting their eligibility for unemployment compensation?

A: In general, an individual is ineligible for benefits during any week in which he or she has received or is about to receive money from the employer as compensation for lost wages.

Such compensation includes payments of wages in lieu of notice (including any payment made under the federal WARN Act), dismissal payments such as severance or separation payments, and certain payments of accrued vacation time.

However, any payments made under a contractual or employer-sponsored plan created for the purpose of supplementing unemployment benefits is not considered compensation for loss of wages and has no effect on the individual’s benefit entitlement.

In other words, an employer can supplement employees’ unemployment compensation if the company has established a specific, non-arbitrary plan for doing so. You should be aware, however, that the plan may be an “employee welfare benefit plan” subject to ERISA; consult with your benefits adviser about the legal implications and requirements for establishing such a plan. 

Also, when an employer conditions a severance payment on the individual’s signing a waiver of legal claims against the employer, the severance payment will not be allocated against the individual’s unemployment compensation benefits.