Redundancy in United States

Severance is a matter of agreement, not law, in most states. It usually comes with a release: you give up the right to sue in exchange for the payment. Read it carefully before signing, and consider having an employment lawyer look at it.

If you're 40 or older, federal law gives you at least 21 days to consider a release (45 days in a group layoff, when the employer must also disclose the ages and job titles of who was and wasn't selected) and 7 days to change your mind after signing.

• New Jersey: employers with 100+ employees must pay severance of 1 week per full year of service to everyone in a mass layoff of 50+, plus 4 more weeks if they give less than 90 days' notice.
• Maine: in closures and mass layoffs, employees with 3+ years get 1 week's pay per year of service.
• Discrimination charges with the EEOC must usually be filed within 180 days (300 in many states).

Employers with 100+ employees must give 60 days' written notice of a plant closing (50+ people losing jobs at a site) or a mass layoff (500+ people, or 50–499 who make up at least a third of the site). If they don't, you may be owed back pay and benefits for up to 60 days.

• New York: 90 days' notice, triggered at 25+ employees.
• New Jersey: 90 days' notice plus mandatory severance (see above).
• California: 60 days' notice for layoffs of 50+ at establishments with 75+ employees, regardless of percentage.
• Illinois: 60 days' notice for employers with 75+ full-time employees.

File in the state where you worked as soon as you are laid off. Benefits run for up to 26 weeks in most states, but some pay far less: 12 weeks in Arkansas, Florida, Louisiana, North Carolina and Tennessee; 14 in Alabama and Georgia; 16 in Iowa, Kansas, Kentucky and Oklahoma; 20 in Missouri and South Carolina; 24 in Arizona and Montana.

Benefits are taxable. Some states have a one-week waiting period, and severance or pay in lieu of notice can delay or reduce benefits in some states. Apply anyway and let the state decide.

COBRA lets you keep your employer's plan (at employers with 20+ staff) for up to 18 months. You have at least 60 days to elect it, and can pay up to 102% of the full premium. The first payment is due 45 days after you elect.

Losing job-based cover also opens a 60-day Special Enrollment Period at HealthCare.gov. Voluntarily dropping COBRA later does not open a new window, so compare both now. Enhanced Marketplace subsidies expired after 2025, so check the real cost.

• Final paycheck and unused PTO: timing and payout rules are set by each state. Some require payout of accrued vacation; others leave it to company policy.
• 401(k): avoid cashing out, which usually triggers tax and a 10% penalty if you are under 59½ (the penalty doesn't apply to that employer's plan if you leave in or after the year you turn 55). You can leave it, roll it into an IRA, or move it to a new employer's plan. Outstanding 401(k) loans may become due.
• Tax: severance is supplemental wages, with federal income tax usually withheld at a flat 22% (37% over $1 million), plus Social Security and Medicare. Withholding isn't your final bill.