Just laid off?
Know exactly what your severance is worth.

There is no legal formula — severance is set by your employer's policy or your agreement. The overwhelmingly common structure in the U.S. is weeks of pay per year of service: typically 1 week per year at smaller companies and 2 weeks per year (sometimes more for senior roles) at larger ones, often with a minimum (e.g. 4 weeks) and a cap (e.g. 26 weeks).

The math is simple: weekly pay (annual salary ÷ 52) × years of service × the policy multiplier. An $85,000 salary with 5 years at 2 weeks/year is 10 weeks ≈ $16,350 gross. Executives and negotiated exits can look very different — months of salary, bonus proration, equity acceleration.

Where to find your employer's formula: your offer letter, the employee handbook, any severance plan document (large companies often have an ERISA severance plan), or the separation agreement itself.

Yes — for withholding purposes, severance is 'supplemental wages', the same IRS category as bonuses. If it's paid as a separate check, employers almost always withhold a flat 22% for federal income tax (37% on any portion above $1 million), plus Social Security 6.2% (until you hit the annual wage base) and Medicare 1.45%. State income tax comes out too, at your state's supplemental rate.

Two things people miss: first, withholding is not your tax. If your total income for the year ends up lower because you were unemployed for months, the 22% withheld may be more than you actually owe — you'd get the difference back as a refund. Second, a large lump sum can push more Social Security tax into this paycheck than you're used to seeing.

If the layoff happens late in the year and you've already passed the Social Security wage base, no more 6.2% comes out of the severance — our tax tab accounts for this if you enter your year-to-date wages.

Usually yes, but the details are state-specific. Unemployment insurance is a state program you paid into through payroll taxes; receiving severance does not automatically disqualify you.

The key variable is how the severance is paid. A one-time lump sum often has no effect on benefits (or affects only the week it's received). 'Salary continuation' — staying on payroll for N weeks — more often delays your unemployment eligibility until it ends, because you're technically still being paid wages. Some states offset benefits dollar-for-dollar against severance allocated to specific weeks.

Practical advice: file for unemployment the week you're laid off, no matter what. Report the severance honestly on the application — the state agency will apply its own rules and tell you when benefits begin. Waiting to file only delays the clock.

The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100+ full-time employees to give 60 days' advance written notice of a plant closing or mass layoff (generally 50+ employees at a single site).

If the employer fails to give proper notice, affected employees can be owed up to 60 days of back pay and benefits. Many employers satisfy WARN by giving 'pay in lieu of notice' — you're terminated immediately but paid for the 60-day period. That WARN pay is separate from severance: a package that only pays what WARN already requires isn't really offering you anything extra for signing a release.

Several states go further: California's mini-WARN covers employers with 75+ employees, New York requires 90 days' notice, and others have their own thresholds. If you were part of a sudden mass layoff with no notice, it's worth a conversation with an employment attorney — WARN claims are real money.

COBRA lets you keep your exact employer health plan for up to 18 months after a layoff (36 in some situations). The catch is the price: you pay 100% of the premium — your old paycheck deduction plus everything your employer was quietly covering — plus an admin fee of up to 2%.

Since employers typically pay 70–80% of premiums, the sticker shock is real: a $200/month paycheck deduction can become an $800+/month COBRA bill. You have 60 days from your election notice to decide, and coverage is retroactive to the day you lost it — so you can wait, stay covered on paper, and only pay if something happens during the window.

Before electing, compare an ACA marketplace plan at healthcare.gov. Losing job-based coverage opens a 60-day special enrollment period, and with lower expected income for the year you may qualify for premium subsidies that make a marketplace plan dramatically cheaper than COBRA.

The release of claims you're asked to sign is what the company is buying — which means you have something to sell. Before signing: (1) Don't sign on the spot; if you're 40+, federal law gives you at least 21 days to consider it. (2) Ask for more weeks — cite tenure, performance, and what comparable colleagues received. (3) Ask the company to pay your COBRA premiums for 3–6 months; it's cheaper for them than more salary and hugely valuable to you.

Also on the table: extension of your stock-option exercise window (the 90-day default is brutal for the newly unemployed), accelerated vesting of near-term equity, proration of your annual bonus, keeping the laptop, a neutral or positive reference letter, outplacement services, and an agreed internal 'departure story'.

Get every promise in the written agreement — verbal assurances from HR are worth nothing later. If the numbers are large or anything about the exit feels off (discrimination, retaliation, unpaid wages), spend a few hundred dollars on an employment attorney review before signing. It routinely pays for itself.