Worked example: $95K salary, 6 years of service
Weekly pay is $1,827. At 2 weeks per year, tenure yields 12 weeks — well above the 4-week floor — for $21,923 of cash severance. Eight days of accrued PTO add $2,923, and 3 months of benefits continuation is worth $1,950. Total package: roughly $26,800, of which about $24,800 is taxable cash.
- • Negotiation leverage exists: asking for +2 weeks or extended benefits is normal and often granted.
- • Signing a release of claims is usually required — read it before accepting.
- • WARN Act notice pay (60 days) is separate from severance in covered mass layoffs.
What is negotiable (almost everything)
Severance is consideration for a legal release, which makes it negotiable by nature. Common asks: more weeks, pro-rated bonus, accelerated or extended equity vesting, benefits continuation past COBRA employer subsidy, outplacement services, and a neutral reference letter. Employers rarely withdraw an offer because you asked — the release is worth money to them.
FAQ
Is severance pay required by law?
No federal law requires severance; it comes from company policy, employment contracts, union agreements, or negotiation. The WARN Act requires 60 days notice (or pay in lieu) for covered mass layoffs, but that is notice pay, not severance.
How is severance taxed?
As supplemental wages: 22% flat federal withholding (37% above $1M), plus 6.2% Social Security up to the wage cap, 1.45% Medicare, and state tax. It counts toward Social Security earnings like regular pay.
Can I collect unemployment while receiving severance?
It depends on the state. Some states delay unemployment benefits until severance weeks run out; others let you collect immediately. File anyway — the state agency will make the determination.
What is a typical severance for executives?
Executive packages commonly run 3–4 weeks per year of service, 6–12 months flat, or are defined in the employment agreement. C-suite contracts often include change-of-control multiples of 1–2× salary plus bonus.
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