Posted By Ester Venouziou,
Monday, October 31, 2011
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I read somewhere that getting laid off is a grieving process, and those of us laid off experience the five stages of grief: denial, anger, bargaining, depression, acceptance. I thought I had
skipped them all and gone straight into the acceptance phase.
But today I'm angry. Here's why.
I discovered some very unwelcomed news today: My severance pay is a lot lower than I was expecting, and there's nothing I can do about it.
When I got laid off from the St. Petersburg Times 3.5 weeks ago, I was told I was getting 18 weeks in severance compensation; the letter I received stated the total amount of compensation, payable over 18 weeks, based on my salary (which had already been reduced by 5 percent, because the Times had instituted a 5 percent pay cut a few weeks before starting their massive layoffs). So I figured that meant for the next 18 weeks I'd be getting same weekly pay I had been getting before I got laid off. Maybe even a little more, since I was no longer participating in their health insurance plan.
Turns out my weekly severance is significantly lower than what my weekly pay used to be. The taxes they were taking out were much higher than they were back when I still worked at the Times.
I called the Times' payroll and HR departments to find out what was up with that. In payroll the phone just rang and rang and rang; in HR I got voice mail.
I'm not a very patient person, so instead of sitting around for a call back from HR, I did a Google search for "federal tax withholding severance."
I came across The Incredible Shrinking Severance Check page in Recession Wire: The Upside of the Downturn.
They explain: Turns out the government treats the severance check as "supplemental wages," or a bonus, and allows the companies to take a straight 25 percent federal withholding tax.
The companies also have an option of recalculating the tax withholding for each employee they laid off. That would be much more complicated and time-consuming, of course, but it would give the former staff member a weekly severance check that more closely matches what their weekly pay used to be. Better for the staff member, more work for the company.
Looks like the St. PetersburgTimes decided to take the easy way out and go for the straight tax withholding.
At tax time, Recession Wire says, it all works out, and those who were slapped with the 25 percent tax get a refund. Until then, those of us who lost our jobs apparently need to just deal with it.
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Ester Venouziou, founder of LocalShops1.com and co-founder
of Gulfport! Magazine, is available for freelance projects: writing,
editing, design or social media. She can be reached at
firstname.lastname@example.org or 727.637.5586.
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