Is my employer legally required to offer severance?

No. Under federal law, severance is entirely voluntary unless specified in your employment contract or company policy. Some employers have formal severance plans that create enforceable rights. For most at-will employees, severance is a discretionary offer in exchange for a release of claims. You have no legal entitlement to severance, but most employers offer it to avoid legal risk.

How is severance taxed?

As ordinary supplemental wages. Federal withholding at 22% for lump sum (up to $1M, then 37%). FICA (7.65%) and state tax apply. True tax liability is based on your marginal rate at year-end — if you're in a high bracket, you may owe more at tax time than was withheld. Set aside 5-10% of severance for tax reconciliation.

Does accepting severance affect my unemployment eligibility?

Varies by state and payout type. Lump sum severance typically doesn't delay UI in most states (though some states count it against the first weeks). Salary continuation usually delays UI until payments end. Check your state's specific rules. Either way, file UI in week 1 so you're in the system when eligible.

Should I negotiate severance even if the offer seems fair?

Yes — almost always. 'Fair' as defined by the employer is usually lower than the range they'd accept. A polite counter asking for 20-40% more, plus improvements to COBRA, equity treatment, or references, succeeds in 60-70% of negotiations. The worst outcome is they say no and you accept the original; you never lose the original offer by counter-proposing.

Can I collect severance and unemployment at the same time?

Yes in most states, but the timing matters. Severance may delay when UI begins (especially salary continuation). Once severance ends or doesn't disqualify you, UI kicks in. Running both concurrently requires careful state-specific rules — some states allow it, some deduct severance dollar-for-dollar from UI.

What happens to my 401(k), equity, and benefits after layoff?

401(k): your balance is yours, but you can no longer contribute. Roll over to IRA or new employer's plan. Equity: unvested equity forfeits (unless negotiated to vest). Vested options typically have 90-day exercise window. Health insurance: ends at separation date unless COBRA-subsidized. Short-term disability: unusable post-separation. Life insurance: convertible to individual policy at COBRA-like cost.

Yes. The calculator runs entirely in your browser. Salary and severance data never touch a server. Export the PDF if you want a record for attorney consultation or household financial planning.

Severance Package Calculator

Severance is negotiable — most people accept the first offer

When someone gets handed a layoff packet, the normal instinct is to sign fast and get the check. This is backwards. Severance offers are almost always an opening position, not a final one. The employer has already decided they need you gone; the size of the package is still in play.

Real data from outplacement firms and employment attorneys: roughly 60-70% of severance offers can be increased by 10-40% through counteroffer, and about 20-30% of packages can be increased by more than 40%. Most people take the first offer because they think it's fixed. Employers don't correct that mistaken assumption.

This calculator shows you the current offer's net value after federal and FICA tax, plus COBRA cost for continued health insurance. That net number is what you're actually negotiating over. Seeing it laid out helps you evaluate whether to push back and by how much.

Standard severance benchmarks

Typical severance ranges by tenure and role level:

Non-manager, under 3 years: 2-4 weeks severance, sometimes none.
Non-manager, 3-10 years: 4-12 weeks severance (roughly 2 weeks per year of tenure).
Non-manager, 10+ years: 12-26 weeks (capped at around 6 months at most employers).
Mid-level manager: 1-2 weeks per year of tenure, minimum 4-8 weeks.
Director: 2-3 weeks per year of tenure, minimum 8-12 weeks.
VP: 3-4 weeks per year of tenure, minimum 12-24 weeks.
C-suite: Often 6-12 months baseline, contractually specified, sometimes with additional equity acceleration.

These are starting points. Company policies vary dramatically — some have formal severance policies that HR must follow; others negotiate each package. For mass layoffs (WARN Act applies at 100+ affected employees), severance is often a fixed formula and less negotiable because the company needs consistency to avoid discrimination claims.

A real case: the director who doubled the offer

Tanya, a senior marketing director earning $175k with 8 years of tenure, was laid off in a mid-2024 reorg. Initial offer:

Severance: 12 weeks ($40,385)
COBRA subsidy: 3 months
Unvested equity: forfeit
PTO payout: 40 hours (her balance was 180 hours)
60-day non-disparagement clause

She hired an employment attorney ($1,800 flat fee for severance review) and identified several counters. The attorney's letter went to the company's HR with specific asks:

Severance: 24 weeks (doubled, citing her 8-year tenure and director role)
COBRA: 6 months (industry standard for director-level)
Unvested equity: vest 12 weeks' worth to mirror severance period
PTO: full accrued balance payout (CA law required anyway)
Remove non-disparagement or reciprocal (can't disparage her either)
Extend signing window from 21 to 45 days (federal ADEA requirement already, but make explicit)

The company's counter:

Severance: 20 weeks ($67,308) - accepted
COBRA: 6 months - accepted
Unvested equity: 6 weeks' worth vested (compromise) - accepted
PTO: full payout ($14,000) - accepted (legally required)
Non-disparagement: mutual - accepted
Extended review: accepted

Net improvement: $27k in additional severance + $4k in equity + $12k in additional PTO vs original = $43k of additional value for a $1,800 attorney fee. 24x ROI on the lawyer.

This outcome isn't unusual. Most severance packages have $10-60k of negotiating room depending on seniority, tenure, and the company's urgency to close out the layoff cleanly.

What to negotiate (beyond just the cash)

Severance has many components beyond the cash severance itself. High-value items often skipped:

COBRA subsidy. Ask for 6-12 months of employer-paid COBRA (about $600-1,500/month for family coverage). This often costs the employer less than equivalent cash severance because they buy COBRA at corporate rates.
Equity acceleration. Unvested RSUs, options, or PSUs forfeit by default. Negotiate for vesting to continue through the severance period, or a portion to vest immediately. Partial acceleration is common for senior terminations.
Bonus proration. If you're being laid off before an annual bonus cycle, negotiate proration for the portion of the year you worked. Companies often fight this but give in for executives.
Outplacement services. Executive outplacement (4-6 months with a firm like Lee Hecht Harrison or Right Management) is worth $5-15k and often provided automatically. For non-executives, 1-3 months of outplacement is worth asking for.
Reference letter. Get it in writing at signing. "Your manager will provide a positive reference" in verbal conversation is worthless; a signed letter from HR or your manager is valuable.
Non-compete removal or modification. If your contract has a non-compete, severance is leverage to remove or shorten it. Don't let a broad non-compete restrict your next job opportunity.
Non-disparagement reciprocity. If they want you to agree not to disparage them, they should agree not to disparage you. Mutual clauses protect both parties.
Continued vesting cycle. Some senior packages include staying on the books as an "advisor" for 3-6 months post-termination specifically to keep vesting continuing. Worth asking about for senior roles.

Lump sum vs salary continuation

Two structures for severance payout:

Lump sum: One check within 30-60 days of signing. Tax-advantaged for employees in most cases because the flat 22% supplemental withholding applies to the lump (same treatment as bonuses). Better for cash planning — you know what you have.
Salary continuation: You remain on payroll at your normal pay schedule for the severance period. Higher withholding because normal paycheck tax tables apply. Health insurance continuation often bundled in (no COBRA needed during continuation).

Trade-offs:

Unemployment impact: Salary continuation typically delays UI eligibility until payments stop. Lump sum usually doesn't (varies by state). For high earners where UI is a small supplement, this matters less; for lower earners, lump sum access to UI is valuable.
Job search signaling: On salary continuation, you're technically still employed, which can help applications that ask about current employment status. Lump sum = immediately unemployed on paper.
Health insurance: Salary continuation usually maintains employer coverage; lump sum requires COBRA or ACA. If you have ongoing medical needs, salary continuation can save meaningful money.
Psychological closure: Lump sum = clean break. Salary continuation = ongoing tether to former employer. For some people, clean break is worth the tax inefficiency.

For most professionals, if given the choice, lump sum with explicit COBRA subsidy is cleanest. Salary continuation makes sense only when health insurance or UI coordination specifically favors it.

The release agreement: what you're actually signing

Severance is typically contingent on signing a release agreement. Standard components and how to read them:

Release of claims. You agree not to sue the company for wrongful termination, discrimination, harassment, wage claims, etc. This is the core trade — severance for release. Legal and enforceable.
Non-disparagement. You agree not to make negative public statements about the company. Should be mutual. Limit scope to public statements, not private ones to friends/family.
Non-disclosure. You agree not to share confidential information. Usually fine but should have a time limit (typically 2-5 years) and not extend to trade secrets you didn't actually work on.
Cooperation clause. You agree to cooperate with future litigation the company may face. Should specify that cooperation is limited to actual knowledge you have, and that the company covers your costs (including lost wages if testimony is required).
Non-compete / non-solicit. Not standard in severance releases — usually in employment contracts. If new ones are added, push back. You shouldn't be signing new restrictions at layoff; you should be removing old ones.
Confidentiality of the release itself. Sometimes required — you can't discuss the severance amount. Usually acceptable but ask for a carve-out for your attorney, tax advisor, and spouse.

If you're 40+ years old, the federal ADEA gives you 21 days to review (45 days for group layoffs) and 7 days to revoke after signing. Use the time. Don't sign on day 1 even if pressured.

When to hire an employment attorney

Most severance agreements don't require legal review. But several situations strongly recommend it:

Severance value over $50k. At this size, a $1,500-3,000 attorney fee is a high-ROI insurance policy. Attorneys regularly find $10k+ of negotiating room.
Signs of potential discrimination or retaliation. If you suspect the layoff was motivated by age, gender, race, disability, or protected activity (complaints about safety, reporting harassment, FMLA leave), an attorney evaluates whether you have claims that would justify refusing the standard release.
Non-standard clauses in the agreement. Broad non-competes, unusual cooperation requirements, ambiguous scope on restrictions. Lawyers catch enforceability issues that matter for your next job.
Significant unvested equity. Executives with $200k+ of unvested equity have complex negotiation needs that benefit from legal counsel.
Executive-level departures. C-suite, SVP, Partner-level. Agreements are complex; specialized attorneys are essential.

How to find one: employment law attorneys (specifically representing employees, not employers). Typical fee: $1,500-5,000 flat for severance review and negotiation assistance. Many offer free 30-minute initial consultations. Don't hire a general-practice attorney — find someone who does employment law as 80%+ of their practice.

After accepting: the job search decisions

Severance creates runway. Use it well:

Don't relax for too long. One to two weeks of genuine decompression is healthy. Beyond that, job search momentum fades and the market forgets you.
Start networking in week 2. Former colleagues, industry peers, past customers. Not "I need a job" but "I'm transitioning and would love to catch up."
Update your positioning. Severance often coincides with an opportunity to pivot or level up. Don't assume your next role is the same as your last. Think about what your experience actually qualifies you for, not just what your title matches.
File for UI in week 1. Even if severance makes you ineligible for several weeks, the clock starts on your state's filing, and you want to be in the system when severance ends.
Preserve your professional profile. LinkedIn stays active with thoughtful posts, engagement with your network, and content sharing. Don't go silent for months while unemployed.
Set a timeline milestone. "By month 3 I want to be in active final-round interviews." Without milestones, the runway disappears and panic sets in at month 5.

Severance is compensation for your past work, not a reward for staying home. It's runway to make your next career move from a position of choice rather than desperation. Spend it accordingly.