Severance guide
Is my severance offer fair?
Compare the cash, benefits and restrictions in a severance offer without treating a pay-per-year formula as a legal entitlement.
Start with what the employer already owes
There is no universal US severance formula. The Fair Labor Standards Act does not require severance pay, according to the Department of Labor. A contract, union agreement, employer plan or other applicable law can change what is owed. Find those documents before comparing your offer to an informal benchmark.
Separate severance from final wages, earned commissions, expenses and any payable leave. State law and the terms of the relevant plan can matter. An amount already owed should not be mistaken for additional payment in exchange for a release.
Compare the entire package, not just a dollar number
Make a list of the gross severance payment, installments and payment dates, health-coverage contributions, equity terms and any reference commitment. Calculate which amounts are definite and which depend on future conditions. Check whether payments stop if you find a job or breach a restriction.
For covered plans and qualifying events, COBRA can allow continuation of group health coverage. That does not mean the employer must pay the premiums. Ask who pays, for how long, and what happens if coverage or employment circumstances change.
Put a price question next to each restriction
A release, non-compete, non-solicit, confidentiality clause and cooperation duty do different things. Record their duration, scope and consequences of breach. A larger check is not necessarily a better offer if it comes with materially different obligations.
No online formula can establish what a potential discrimination or wage claim is worth. An attorney needs the agreement and the underlying facts, including your employment history and any earlier complaints or leave requests.
Build a comparison sheet
For each item, write: what the document promises; when it happens; any condition; what is missing; and the question you need answered. Include related documents referenced in the agreement. Do not assume an omitted benefit will be provided.
Use this sheet to request clarification or discuss possible changes with an attorney. Negotiation outcomes vary; the employer may refuse, revise or withdraw an offer. Confirm the current deadline before making a request.
A filled-in severance comparison
This fictional package separates promised severance from other compensation. It is not a market benchmark or a recommended offer.
| Item | Written promise | Question to resolve |
|---|---|---|
| Severance | $8,000 in two $4,000 installments | Which dates apply, and what can stop the second payment? |
| Final wages | Listed separately; amount not specified | What pay period and earned amounts remain unpaid? |
| Health coverage | Continuation offered; no subsidy stated | What is the monthly premium and coverage end date? |
| Job restrictions | Payment depends on Sections 6–9 | What work, customers and time periods do those sections cover? |
| Reference | No commitment stated | Will the employer confirm a reference policy in writing? |
The $8,000 figure describes gross severance, not take-home pay or the value of the whole package. A promised installment is not the same as money already paid; unstated benefits remain unknown.
Worked example · hypothetical, not a real agreement
“The Company will pay $8,000 in two installments, subject to continued compliance with Sections 6\u20139.”
The headline is $8,000 gross, but this wording makes payment conditional. Read Sections 6\u20139 and the installment dates before counting the full sum as unconditional. This example does not tell you whether the amount is fair.
Question for an attorney: What can stop either installment, and are the restrictions proportionate to the payment?
Sources & scope
Published by 2nded. Content revised October 30, 2026. General US information with state examples labeled separately. Not reviewed or certified by an attorney.
- US Department of Labor: Severance pay
The FLSA does not require severance pay; contracts, plans and other laws can create separate obligations.
- US Department of Labor: COBRA overview
Continuation coverage depends on the plan and qualifying event; employer-paid premiums are not automatically required.
- EEOC: Understanding waivers in severance agreements
Federal discrimination releases, protected agency participation and age-waiver requirements.
Related severance questions
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This page is general information, not legal advice. Employment law varies by state and the facts of your situation matter. Talk to a licensed employment attorney in your state before signing or declining an agreement.