Severance Is Usually Not Legally Required
In the United States, most employers are not legally required to offer severance unless it's promised in an employment contract, a union agreement, or a written company policy. It's typically offered voluntarily — often to secure a signed release of legal claims, or simply as a goodwill gesture during layoffs.
How Severance Amounts Are Typically Calculated
A common (though not universal) formula is 1-2 weeks of pay per year of service, with 2 weeks per year being a frequently cited standard for many companies. Executives and longer-tenured employees sometimes receive more generous packages. There's significant variation by industry, company size, and specific circumstances of the departure.
What a Full Severance Package Can Include
- Base severance pay — calculated as above
- Continued health insurance — sometimes the employer covers COBRA premiums for a set period
- Unused PTO payout — many states require this regardless of severance
- Outplacement services — career coaching or job search support
- Accelerated equity vesting — for employees with stock options or RSUs, sometimes negotiated as part of the package
The WARN Act: A Separate Consideration
For larger layoffs at bigger companies (generally 100+ employees, with specific thresholds), the federal Worker Adjustment and Retraining Notification (WARN) Act may require 60 days advance notice of a mass layoff or plant closing — or pay in lieu of that notice. This is separate from, and in addition to, any standard severance offer.
What to Check Before Signing
- Release of claims language — most severance agreements require you to waive the right to sue the company; understand exactly what you're giving up.
- Non-compete or non-solicitation clauses — some agreements include or reaffirm these; understand how they might limit your next opportunity.
- Timeline to review — federal law (the Older Workers Benefit Protection Act) requires at least 21 days to consider a severance agreement if you're 40 or older, plus a 7-day revocation period after signing.
- Whether it's negotiable — severance offers, especially the initial draft, are sometimes negotiable, particularly around the amount, COBRA coverage period, or reference language.
Should You Negotiate?
It's usually worth at least asking, especially if you have leverage (long tenure, a strong performance record, or knowledge that the company wants a fast, clean exit). The worst outcome is typically just being told no — there's rarely a significant downside to a polite, professional counter-request.