Outside of specific situations, no US law entitles you to severance. Companies pay it for two reasons: to soften layoffs, and to buy a signed release of legal claims. Understanding that second purpose changes how you read the paperwork.
Common shapes
A frequent formula is one to two weeks of pay per year of service, sometimes with a minimum. Executives and long-tenured staff see more. Packages often include a period of subsidized COBRA premiums, payment for unused vacation where state law requires it anyway, and sometimes outplacement services. Everything arrives conditioned on signing a separation agreement.
What the agreement takes
The core of the document is a release: you give up the right to sue over anything arising from the employment, in exchange for the payment. Attached to it you will commonly find non-disparagement terms, confidentiality about the agreement itself, cooperation clauses, and a restatement of any existing restrictive covenants. Workers over 40 get specific federal protections: at least 21 days to consider the agreement (45 in group layoffs) and 7 days to revoke after signing. Those windows exist so you can read it properly. Use them.
What is realistically negotiable
- The amount. Especially with long service or where the selection for layoff looks questionable.
- The end date. Extending employment by weeks can vest equity or a bonus, or carry health coverage another month.
- Benefits continuation. More months of subsidized COBRA is a cheap concession for the company.
- The reference. An agreed neutral reference letter, and internal classification as rehire-eligible.
- Covenant scope. Narrowing a non-compete is often achievable at exactly this moment.
Unemployment benefits are not the company's to give or withhold; the state decides eligibility. An agreement stating the separation as a layoff rather than a termination for cause does help the claim, and asking for that language is reasonable.
Layoffs at scale bring extra rules
The federal WARN Act requires larger employers to give 60 days' notice of mass layoffs or plant closings, and several states have their own versions with lower thresholds and longer notice. Where notice is required and not given, affected employees may be owed pay and benefits for the notice period. Some severance offers are effectively the employer meeting this obligation rather than granting a discretionary benefit, which is worth knowing before treating the package as a generous gesture.
Group layoffs also require, for workers over 40, disclosure of the job titles and ages of everyone selected and everyone not selected in the decisional unit. That disclosure exists so age discrimination patterns are visible. Read it. If the list shows the layoff fell heavily on older workers, that is information you want before signing a release.
Before you sign, the practical checklist
- Confirm the final paycheck, unused vacation and any earned bonus are paid regardless of whether you sign, because those are usually owed anyway.
- Check what happens to vested equity and the exercise window.
- Confirm the last day for benefits and the COBRA start.
- Note the revocation period and diary the deadline.
- Ask what the company will say to reference checks, and get it written down.
When to have a lawyer read it
An hour of an employment lawyer's time is proportionate when the package is substantial, when you suspect the dismissal was discriminatory or retaliatory, or when covenants would limit your next job. You may be releasing claims worth more than the severance, and you cannot know that without advice. The consultation fee is small against a package measured in months of pay.
The EEOC's guidance on waivers in severance agreements covers the over-40 review and revocation periods, and the Department of Labor publishes the WARN Act notice requirements.