Is Severance Required?
Under the Fair Labor Standards Act (FLSA), there is **no federal legal requirement** to provide severance pay. It is a matter of agreement between an employer and an employee.
When is it mandatory?
- WARN Act: If a large company has a "mass layoff" without 60 days notice, they may owe 60 days of back pay and benefits.
- Company Policy: If your employee handbook or contract promises severance, it becomes a legally binding obligation.
- ERISA Plans: Formal severance "plans" fall under federal ERISA rules and must be followed strictly.
💡 Negotiation Tip
Never sign a severance agreement on the spot. You usually have 21 days to review it if you are over 40 years old (under the OWBPA). Use this time to negotiate for better terms or COBRA coverage.