Commentary | Transitional Pay 101 -- in English!

Anonymous@12:28 p.m. has just posted the following primer on the severance benefit Gannett is now offering to laid-off employees.

My understanding of "transitional pay" is that instead of the company paying severance, it will make up the difference between your state's unemployment payment and your weekly pay. By using this program instead of a severance package, Gannett has shifted most of the burden of compensating laid-off workers to the state. That of course does mean that state and federal taxpayers ultimately foot most of Pay former Gannett workers will receive. As an aside, the company does pay a premium to the state for unemployment insurance and, like all other types of insurance, the rate increases when claims are made. So Gannett will pay more for its contribution to state unemployment through higher rates next quarter as a result of the transitional pay plan. But, obviously this is far less expensive than giving severance that includes weekly pay and insurance benefits.

Transitional pay differs from severance pay in several ways. For one, only workers eligible for unemployment will get anything from Gannett. No unemployment check = no company check. By comparison, those who received severance last year continued to collect their pay from the company even when they got new jobs or found freelance work. Transitional pay ends when you find work.

Transitional pay is 1 week for each year of service between 3 and 36 months. That means that anyone employed for less than three years is not eligible. When it runs out, you will likely still collect state unemployment. In Ohio, benefits run for 26 weeks. I don't know if that is true for all states. After that states normally offer at least one extention and the federal government offers two extentions.

You will automatically be eligible for transitional pay when you make your unemployment claim. To continue to be eligible for transitional pay, you must fulfill all state requirements for continued pay. You must also call Total Management Solutions, the company Gannett has contracted to administer the "Supplemental Unemployment Benefit Pay Plan," every week starting the second week of unemployment. Failure to do so will result in termination of eligibility and you will lose your right to any further payments.

Thanks to federal stimulus money, any state-required waiting period for your first check is gone. If you file(d) a claim with your state's unemployment office immediately upon learning of your termination, you should get a check on July 17.

Also thanks to the stimulus package, you will not have to pay into FICA (Social Security) during the transitional pay period and you will not be required to pay it when you file your 2009 taxes. That's an additional 7.65 percent of your gross pay that will go in your pocket.

I also read something that said the first $2,400 of your unemployment payments are not taxable. I believe that is also made available by the stimulus.

As for insurance, I was told that mine would end on Aug 1, unless I opted for COBRA. COBRA is the federal law that required employers to keep their laid-off employees on their group health plan for up to 18 months -- with the employee paying 100 percent of the premiums. The federal stimulus bill temporarily amended that. The federal government will pay 65 percent. The worker pays 35. I don't know if the length of time you can keep the coverage was extended under the new law. If I don't opt for COBRA by Aug. 1, I have 30 days to do so in order to have my coverage reinstated.

I hope this helps answer some of the questions I see out there.

Calling human resources!
Can any of you confirm -- and add details? Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green rail, upper right.