Collecting ESD unemployment while receiving severance with non-compete restrictions - is it allowed?
Just got laid off from my tech job in Seattle last week and trying to figure out the unemployment situation while negotiating my severance package. My former employer is offering a decent severance (paid bi-weekly for 3 months) but it comes with some pretty restrictive non-compete clauses that would keep me from working for direct competitors for 6 months. I've been researching and found conflicting information about whether I can collect unemployment while receiving severance in WA state. I've never filed for unemployment before and I left in good standing (company-wide layoffs, not performance related). The severance payments would be direct deposited every two weeks, but I'll be paying nearly $750/month for COBRA to maintain health insurance. Since the non-compete restrictions are pretty much blocking me from working in my specialized field for 6 months, it feels like the severance is actually hindering my ability to find suitable employment. Does anyone know definitively if Washington ESD allows collecting unemployment while receiving severance that has non-compete strings attached? Any advice from someone who's navigated this before would be super helpful!
20 comments
Join the conversation
Andre Rousseau
Yes, you can collect unemployment while receiving severance in Washington State. Severance pay is not considered wages for UI benefit purposes, so it doesn't disqualify you. The key thing is that you need to report the severance payments when you file your weekly claims, but it won't reduce your benefit amount. The non-compete situation is interesting though - make sure you understand exactly what you're agreeing to. Some non-competes in WA have been found unenforceable if too restrictive. Also, when filing for UI, you'll need to be available for suitable work and actively seeking employment, so document how the non-compete limits your job search.
0 coins
Carmen Vega
•That's a huge relief! I was worried the severance would completely disqualify me. I'll definitely report it on my weekly claims. Do you know if there's a specific way I should document how the non-compete is limiting my job search? Should I just note it in the job search log when I'm turned down for roles because of it?
0 coins
Zoe Stavros
my company did the same thing to me last yr... gave me 8wks severance with a huge non-compete attached. i DID collect unemployment while getting severance and ESD didnt care about the non-compete part at all. they just want to know ur getting $ but severence isnt counted as earnings from what they told me. good luck!!
0 coins
Jamal Harris
•did u have to wait until your severance ran out to start getting the UI payments? my HR dept told me I couldn't apply until after my severance ended and now im wondering if they were wrong
0 coins
Zoe Stavros
•no thats totally wrong! apply right away. i got my first UI payment like 2 weeks after applying even tho i was still getting severance. your HR dept is probably just trying to save the company money on their UI tax rate
0 coins
GalaxyGlider
I work in HR and can confirm that in Washington State, severance payments are not considered wages for unemployment insurance purposes. This means you can receive both simultaneously. What you need to be careful about is the non-compete clause. Washington passed a law in 2020 that makes non-competes unenforceable for employees earning less than $100,000 annually. If you earned less than that, the non-compete might not be valid. Even above that threshold, non-competes that extend beyond 18 months are presumed unreasonable. When filing for unemployment, you'll need to be available for work and actively job searching (typically 3 job search activities per week). Make sure you're documenting everything carefully, especially if you're turning down job offers because of the non-compete restrictions. Regarding COBRA - definitely report those expenses to ESD as they may be relevant to your benefit calculation.
0 coins
Carmen Vega
•Thank you for the detailed info! I was making over $100k, so sounds like the non-compete might be enforceable. The 6-month restriction seems reasonable compared to the 18-month threshold you mentioned. I didn't realize I'd need to report the COBRA expenses specifically - is there a form for that or just mention it during the application process?
0 coins
GalaxyGlider
•You won't need a specific form for COBRA expenses, but when you're filing your initial claim, there will be sections asking about your financial situation and impacts to your income. That's where you would mention the COBRA costs. It may not directly affect your benefit calculation (I may have misspoken earlier), but it helps establish your financial need and situation. For the non-compete, even though it may be enforceable, you still need to be applying for jobs to maintain UI eligibility. Focus on positions that don't violate the agreement but still utilize your skills. Document any instances where you had to decline opportunities specifically because of the restrictions.
0 coins
Mei Wong
I WENT THROUGH THIS EXACT THING in January!!! The ESD system is a NIGHTMARE to deal with. I got severance with a non-compete too and tried applying online but kept getting errors. Tried calling ESD for WEEKS and couldn't get through to anyone!!! Finally discovered this service called Claimyr (claimyr.com) that got me through to an actual ESD agent in about 20 minutes instead of waiting on hold forever. They have a video showing how it works: https://youtu.be/7DieNd3C7zQ?si=26TzE_zGms-DODN3 The agent confirmed severance doesn't count against unemployment benefits but you DO have to report it. The non-compete stuff they didn't care about - that's between you and your former employer. As long as you're looking for work and doing your job search activities, you're good. Seriously though, save yourself the headache and use that service if you need to talk to someone at ESD. The online system is confusing and doesn't address special situations well.
0 coins
Carmen Vega
•Thanks for the tip! I was dreading the phone tag with ESD. Did you find that having the non-compete made it harder to meet the job search requirements? I'm worried about having to turn down interviews because of the restrictions.
0 coins
Mei Wong
•The job search requirements weren't too bad actually. You need 3 job search activities per week, but those can include things like updating your resume, attending workshops through WorkSource, networking events, etc. - not just applications. I focused on jobs adjacent to my field that wouldn't violate the non-compete. When I did have to turn down an interview because of the non-compete, I just documented that as part of my job search log. ESD never questioned it. The agent I spoke with said as long as you're making good-faith efforts to find suitable work, they understand there may be limitations.
0 coins
Liam Sullivan
Everyone's saying you can collect UI while getting severance, but BE CAREFUL. If your severance agreement says it's "wages in lieu of notice" instead of just "severance pay," it CAN affect your unemployment benefits. The terminology matters a lot. Also, I'm pretty sure ESD will ask you if you're receiving any other payments during your weekly claims, and you need to select "severance pay" from the dropdown and report the amount. They might temporarily pause your benefits while they determine how to handle it. When I got laid off in 2024, it took ESD almost 3 weeks to sort out my severance situation before my benefits started flowing. They eventually paid retroactively, but there was a nerve-wracking delay.
0 coins
Carmen Vega
•That's a good point - I'll have to check the exact wording in my severance agreement. It doesn't specifically say "wages in lieu of notice" but I should double-check. Did you have any issues with documentation they required regarding the severance?
0 coins
Liam Sullivan
•Yes, they asked me to upload a copy of my severance agreement through my eServices account. They also wanted to see at least one of the severance payment stubs. I think they were checking both the terminology and the payment schedule. Be prepared for possible adjudication - that's when they assign a specialist to review your specific situation. If that happens, make sure you respond to any requests for information right away. ESD isn't exactly known for their speed, so any delay on your end can really stretch things out.
0 coins
Amara Okafor
Hold up...everyone's talking about the severance but missing a BIG point here. Non-competes in Washington were SEVERELY limited by that 2020 law. If your non-compete didn't come with additional compensation SPECIFICALLY for the non-compete period (separate from regular severance), it might not be enforceable at all! I'd talk to an employment attorney before assuming you can't work in your field. Companies throw these agreements around like confetti knowing most people won't challenge them. You might have more options than you think.
0 coins
Carmen Vega
•Really? I had no idea the non-compete might need separate compensation to be valid. The severance package is just presented as one lump sum for the layoff, not specifically tied to the non-compete restrictions. I'll definitely look into consulting with an employment attorney - thanks for bringing this up!
0 coins
Jamal Harris
anyone know if the severance affects the weekly benefit amount? i'm confused about how they calculate it
0 coins
Andre Rousseau
•In Washington, severance pay doesn't affect your weekly benefit amount (WBA). Your WBA is calculated based on your wages during the base year (typically the first 4 of the last 5 completed calendar quarters before you filed). Severance is not considered wages for UI purposes, so it won't reduce your benefits. You still need to report receiving it on your weekly claims, but it won't change the amount you receive. However, if you're working part-time while on unemployment, those earnings would reduce your weekly benefit based on ESD's earnings deduction formula.
0 coins
Liam Sullivan
Another critical thing to remember - make absolutely sure you start filing your weekly claims right away, even if you're still sorting out the severance/non-compete stuff. You can always go back and adjust info if needed, but if you miss filing weeks, it's nearly impossible to claim them retroactively without a major appeal process. I know several people who waited until their severance ran out to start filing, thinking they couldn't collect both, and they permanently lost weeks they could have claimed.
0 coins
Carmen Vega
•That's extremely helpful - I was actually debating whether to wait until the severance situation was clearer. I'll go ahead and start the application process right away and keep filing weekly claims regardless. Better to have everything in the system than risk losing weeks of eligibility.
0 coins