A New York court recently ruled that Lawrence Schachter, a former director of technology, was ineligible to receive unemployment benefits because he received severance pay. The Appellate Division of the Supreme Court of New York made this decision on September 17, 2026, affecting Schachter's financial support following his job loss. This case highlights important aspects of unemployment insurance laws and how severance payments can impact eligibility for benefits.
Schachter worked for a real estate investment and property management company for nearly three years. After being let go in June 2023, he signed an agreement to receive a substantial payment in two installments. However, he filed for unemployment benefits before returning the signed agreement and certified that he had not received any dismissal or severance pay. This discrepancy led to a legal dispute regarding his eligibility for benefits.
The case reached the Appellate Division after the Unemployment Insurance Appeal Board ruled against Schachter in February 2025. The board found that he was ineligible for benefits due to the severance pay he received, which he had not disclosed when applying for unemployment. The Department of Labor determined that he had made a willful misrepresentation to obtain benefits, resulting in penalties and an overpayment charge.
In its ruling, the court affirmed the board's decision, stating, "Substantial evidence supports the Board's finding that claimant was ineligible for benefits during the dismissal period." The judges involved in this ruling were Pritzker, Ceresia, Powers, Corcoran, and Ryba. The court emphasized that dismissal pay, including severance, disqualifies individuals from receiving unemployment benefits for the duration of the dismissal period.
The court explained that dismissal pay refers to payments made to employees upon separation from their employer. Schachter's case demonstrated that the payments he received were indeed linked to his termination, as both he and the employer's HR director confirmed that the payment was categorized as severance. The court noted that the payment was made within 30 days of his last day of work, further solidifying the board's decision.
As a result of this ruling, Schachter is required to repay the unemployment benefits he received during the period he was ineligible. The court ruled that the benefits paid to him are recoverable due to his false statements on the application. The judges stated, "The unemployment insurance benefits paid to claimant are recoverable based upon the false statements." This ruling serves as a reminder of the importance of accurately reporting income when applying for unemployment benefits.
The implications of this ruling extend beyond Schachter's case. It reinforces the principle that severance pay can affect eligibility for unemployment benefits. Individuals who receive such payments must be cautious when applying for benefits, as failure to disclose this information can lead to significant penalties. This case could influence future claims and how courts interpret the relationship between severance pay and unemployment benefits.
Going forward, individuals who find themselves in similar situations should ensure they understand the rules surrounding unemployment benefits and severance pay. The court's decision serves as a warning that misrepresentation can have serious consequences, including the loss of benefits and financial penalties.
As for Schachter, he may consider appealing the court's decision, although details regarding any potential appeal were not available in the court filing. There are no related cases pending at this time that could directly impact the outcome of this ruling.