Resigning May Disqualify You From Receiving Unemployment Benefits

resigning-unemployment-benefitsSometimes employers offer severance to an employee who is to be laid off due to reduction in force or for any other reason, and ask that employee to sign the document certifying that he/she is resigning, rather than being laid off or terminated in exchange for severance. The employee is under the impression that resignation looks better than being laid off on his record for the purposes of finding future employment. The employee is also being promised by the company that they will not contest the employee’s application for unemployment benefits, and the employee decides to take the deal.

The problem with the above arrangement is that the employee is very likely to be disqualified from receiving unemployment benefits. It is a mistake for the employer to suggest and for the employee to believe that just because the employer doesn’t contest the employee’s eligibility for benefits, the employee will be awarded such benefits automatically. The determination of eligibility for unemployment benefits is made by the Employment Development Department independently and regardless of the employer’s position on that. Under the law, an employee who resigns (except for good cause) is not qualified for unemployment benefits, and it’s not the employer’s call to choose¬†whether the benefits will be paid.

Further and on a more practical note, it is not clear to me why some employees think that resignation looks better on their record than lay-off. Resigning from a job might create an impression to a future employer that the employee has a habit of quitting and might quit on the new employer just like he did in the past. Record of lay-off is generally harmless except in those industries, where it is known that if you are good enough, the company is going to keep you no matter what. By definition, lay-off is an involuntary, no-fault separation that occurs due to the company’s reduction in force or restructuring, and has nothing to do with the quality of the employee’s job performance, so in the vast majority of cases this should not create any kind of negative mark on the employee’s employment record or reputation.