Legislation Removes Vacation Pay Penalty on Unemployment Eligibility Bookmark and Share

May 27, 2010

Starting this summer, Maine workers will no longer have earned vacation pay interfere with their eligibility for unemployment benefits after the loss of a job. At a ceremonial bill signing at the State House today, Governor Baldacci praised the reform which removes an offset on unemployment benefits for laid-off workers owed vacation pay from their former employer.

“Unemployment insurance is an important financial resource for laid-off workers and their families following the loss of a job.” said Baldacci. “Workers who receive vacation pay for time accrued before a layoff should not be penalized by having to wait for their benefits when they are out there looking for their next job.”

The legislation will eliminate any offset of unemployment benefits for vacation pay paid on or after July 12, 2010 to a person filing unemployment claims. It does not change the total amount of benefits an individual can potentially collect during a benefit year but it will enable a person who receives vacation pay after separating from a job to begin collecting benefits sooner.

The law change pertains to a section of Maine unemployment law that requires weekly unemployment benefits to be offset by any pay that worker receives after job separation in the form of dismissal wages, wages in lieu of notice, severance pay, vacation pay or holiday pay. Offsets affect only when the worker can begin collecting benefits, not the total amount of benefits the worker is eligible to receive during a benefit year if they remain unemployed and continue filing weekly claims.

The legislation only pertains to vacation pay, which is one of the most common types of separation pay received by workers filing for unemployment benefits. Prior to the change, workers with weeks of vacation pay owed to them typically have had to wait a corresponding number of weeks before they were eligible to receive their first week of unemployment benefits. For example, a worker owed two weeks of vacation pay from their former employer might have to wait up to two additional weeks before starting to receive unemployment benefits.

The Maine Department of Labor website includes more information about Unemployment Insurance eligibility. Visit online at www.fileforui.com or call 1-800-593-7660 or TTY: 1-888-457-8884.