Severance prep

Short answer: Not automatically. No U.S. federal law requires private employers to pay severance when they lay you off. Severance is usually discretionary or contract-based.

You're most likely to receive severance when one of these applies: your offer letter or employment contract promises it, the employee handbook or a written company policy guarantees it, you have an executive or change-in-control agreement, you're covered by a union collective bargaining agreement, or your employer is using severance to satisfy obligations under the federal WARN Act (60 days of advance notice or pay in lieu for qualifying mass layoffs and plant closings).

To find out what you're owed, check four sources first: your offer letter, the employee handbook in effect on your last day, any separation agreement you've been handed, and any WARN notice your employer issued. The document checklist below covers what to gather before you sign anything.

Review-before-signing checklist

• Severance amount and payment timing (lump sum vs. installments)
• Release scope: which claims are you waiving, and which are explicitly not waived
• Deadline to accept and whether it feels reasonable to review
• Revocation period (OWBPA requires 7 days for workers 40+)

  The Older Workers Benefit Protection Act (OWBPA) gives workers 40 and older at least 7 days to revoke a release after signing.

• Non-disparagement clauses and whether they are mutual
• Confidentiality / NDA terms and any post-employment restrictions
• Non-compete or non-solicit clauses that may affect your next role
• Arbitration clauses that waive your right to a court or class action
• Clawback provisions that could require you to repay severance
• Unpaid wages, unused PTO, accrued bonus, commission, or expense reimbursement
• Equity / RSU / options treatment and vesting acceleration
• Benefits end date and COBRA continuation timing
• Reference policy and rehire eligibility status
• Tax treatment of the severance and any 1099 vs. W-2 implications

When to consult an employment attorney

Consider talking to an employment attorney in your state before you sign if any of these apply:

• The release asks you to waive claims you do not fully understand.
• You believe you were selected for layoff due to discrimination, retaliation, or whistleblower activity.
• You are 40 or older and the OWBPA notice or revocation rules seem unclear or missing.
• The non-compete or non-solicit restrictions could block your next job.
• The severance is contingent on conditions that feel vague or open-ended.
• You were asked to resign rather than being laid off, and the separation terms differ from peers.
• You have a pending internal complaint, EEOC charge, or agency investigation.
• The payment timeline is unusually long or installment-based with penalty clauses.

Severance and immigration status

If you are on a work visa, severance terms can affect your immigration timeline. Review your separation agreement with your immigration attorney to confirm these points:

• How your last day of employment is defined for visa or grace-period purposes.
• Whether your employer will continue to support your visa case or withdraw the petition.
• How COBRA and health coverage timing aligns with your visa requirements.
• What documentation you need for your next visa filing or transfer.

For more, see our guide on work visa issues after layoff.

Severance and WARN

If you were part of a mass layoff or plant closing, the WARN Act may require 60 days of advance notice (or pay in lieu). Severance may be structured to satisfy part of that obligation. Check whether your employer's WARN notice and severance timeline overlap.

Common red flags in severance agreements

• Overly broad release language that covers claims you did not anticipate waiving.
• Confidentiality rules so broad they could affect your ability to describe your work to future employers.
• Non-disparagement clauses that are one-sided (employee-only) rather than mutual.
• Mandatory arbitration with class-action waivers that remove collective leverage.
• Clawback provisions conditioned on future behavior rather than clear factual triggers.
• Unreasonably short review or decision windows, especially for older workers without OWBPA-compliant disclosures.
• Verbal promises that contradict the written agreement.

For related topics, see our guides on HR documentation, COBRA and health insurance, being asked to resign, and our equity guide for tech workers.