Find out what severance you might be entitled to — and what a fair package looks like before you negotiate.
Important: The US has no federal law requiring severance pay. These estimates are based on industry norms and common employer practices — not legal entitlements. Consult an employment attorney if you believe you were wrongfully terminated.
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Your Employment Details
Partial years allowed (e.g. 3.5)
Estimated Severance Range
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Based on X weeks of salary
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Min Weeks
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Typical Weeks
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Max Weeks
Weekly salary: $—
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How This Is Calculated
What Is Typically Included in Severance
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Negotiation Tips
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Don't sign immediately. Most employers give you 21 days to review a severance agreement. Never sign on the same day — always take time to read it.
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Know what you're giving up. Severance agreements typically include a release of claims. You may be waiving the right to sue — including for discrimination or wrongful termination.
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Longer tenure = more leverage. 5+ years earns you more negotiating room. Ask for at least 2 weeks per year of service rather than 1 week.
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Negotiate beyond cash. Extended health insurance (COBRA bridging), equity vesting, job title for references, and outplacement services are all on the table.
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Consider an employment attorney. A 1-hour consultation ($150–$350) can identify leverage you didn't know you had — especially if the termination seems suspicious.
Severance pay is compensation provided by an employer when an employee's job is terminated, typically through no fault of the employee. The United States has no federal law requiring severance pay — the Fair Labor Standards Act (FLSA) does not mandate it. Whether you receive severance, and how much, depends on your employment contract, company policy, your state's laws, and the circumstances of your separation.
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When Severance Is Required
Severance can become legally required if: your employment contract or offer letter promises it, your company's written policy guarantees it, a collective bargaining agreement (union contract) specifies it, or the company made verbal promises about severance that could constitute a binding agreement. In those cases, withholding it could expose the employer to a breach of contract claim.
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The WARN Act
The Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100+ employees to give 60 days' advance notice of mass layoffs or plant closings. If proper notice isn't given, employees may be owed up to 60 days of back pay and benefits — which effectively functions as severance pay, though it's technically a penalty for lack of notice.
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The Standard Formula
The most common severance formula is one to two weeks of pay per year of service. A 5-year employee might receive 5–10 weeks of severance. Executives often negotiate more generous terms — six months to a year is not uncommon at the director and VP levels. The formula is a starting point; the final number is always negotiable.
What a Severance Agreement Typically Includes
Severance packages involve more than a lump sum check. A full package may include several components, each of which can be negotiated:
Cash severance — The base payment, typically based on weeks/months of salary
Health insurance continuation — Employer may pay COBRA premiums for 1–6 months, bridging the gap before new coverage starts
Equity/stock vesting acceleration — Particularly valuable at tech companies; any unvested options or RSUs may be negotiable
Outplacement services — Career coaching, resume help, and job placement assistance; typically valued at $2,000–$10,000
Reference letter and title preservation — Agreement on what the company will say when contacted by future employers
Non-compete and non-disparagement scope — Negotiating narrower restrictions benefits you significantly
Payment timing — Lump sum vs. salary continuation (continuation keeps you on payroll temporarily, which may preserve certain benefits)
How Severance Is Taxed
Severance pay is taxed as ordinary income — the same as your regular wages. Your employer is required to withhold federal and state income taxes, as well as Social Security and Medicare (FICA). If your severance is paid as a lump sum, your employer will likely withhold at the flat supplemental rate of 22% for federal tax (for amounts under $1 million). This may result in over-withholding if your effective tax rate is lower — you'll get the difference back at tax time.
If you receive severance via salary continuation, taxes are withheld from each payment the same way as a regular paycheck. There is no special tax exemption for severance pay, though some legal settlements related to physical injury may be partially excludable.
Severance by Industry: What to Expect
Industry
Typical Formula
Executive Range
Notes
Technology
2–4 wks/yr
6–12 mo
Stock vesting often part of package
Finance / Banking
2–6 wks/yr
6–18 mo
Bonus proration often negotiated
Healthcare
1–3 wks/yr
3–6 mo
Non-profit often less generous
Retail / Hospitality
1–2 wks/yr
3–6 mo
Corporate roles better than store-level
Manufacturing
1–2 wks/yr
3–12 mo
Union contracts may specify terms
Frequently Asked Questions
Do I have to sign a severance agreement to receive payment? +
Most employers require you to sign a separation agreement and release of claims before receiving severance. This document typically releases the company from any legal claims you could bring (including discrimination or wrongful termination suits). You are not required to sign, but refusing usually means forfeiting the severance. For employees 40 and older, the Older Workers Benefit Protection Act (OWBPA) gives you at least 21 days to consider the agreement and 7 days to revoke after signing.
Does receiving severance affect unemployment benefits? +
It depends on your state. Some states treat severance as wages and delay when unemployment benefits begin — for example, if you receive 10 weeks of severance, your unemployment benefits might not start for 10 weeks. Other states allow you to collect unemployment simultaneously with severance. Check your state's Department of Labor website or contact your unemployment office for the rules in your state before relying on a specific start date.
Can I negotiate my severance package? +
Yes — severance is almost always negotiable, especially for more senior employees. The first offer is rarely the final offer. Useful leverage points include: tenure, specialization, difficulty of replacement, any pending bonus or commission, and — carefully — any legal issues that could support a discrimination or retaliation claim. You don't need to threaten litigation; simply asking professionally for more is often enough. Get any counter-offer in writing before signing anything.
What happens to my 401(k) and health insurance when I'm laid off? +
Your vested 401(k) balance is yours to keep — you can leave it with your former employer (for a period), roll it into your new employer's plan, or roll it into an individual IRA. Any unvested employer match is forfeited. For health insurance, you're eligible for COBRA continuation coverage, which lets you keep your current plan for up to 18 months — but you pay the full premium (both your share and the employer's share), which can be expensive. You also qualify for a Special Enrollment Period to buy insurance through the ACA marketplace within 60 days of losing coverage.
Legal Disclaimer: Severance estimates on this page are based on general industry norms and are not a guarantee of any specific payment. No federal law requires severance. Actual entitlement depends on your employment contract, company policy, and applicable state laws. If you believe your termination involved discrimination, retaliation, or other unlawful conduct, consult an employment attorney before signing any severance agreement.