Idaho court finds retention payments to claimant were not severance pay 
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Thursday, November 5, 2020

Idaho court finds retention payments to claimant were not severance pay 

By Payroll and Entitlements Editorial Staff

Retention payments made to a claimant who worked as a kitchen manager were not made “as a result of” the severance of the claimant's employment relationship, and consequently did not constitute reportable severance pay. After a company announced it was moving its operations from Idaho to South Carolina, those who were not relocating were offered an employee retention program to encourage them to continue working until the South Carolina facility was ready. The program included a “Release of Claims Agreement” providing that the employer would pay participating employees “bargained-for compensation” in exchange for giving up certain rights, including the right to quit before their positions were eliminated. The claimant quit and filed for benefits but did not report the retention payments as income. The Department determined that those payments constituted reportable severance pay and that the claimant was required to repay the benefits she had received. The court reversed the Commission's decision affirming the Department's overpayment determination, indicating that the payments the claimant received under the Agreement were not made to compensate her for her past service, but rather to secure her giving up her right to quit before her position was eliminated. Thus, the court reversed the Commission's decision affirming the Department's overpayment determination (Connie L. Schoeffel v. Thorne Research, Inc. and DOL, Ida. Sup. Ct., No. 47101, October 16, 2020). 

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