Guide for workers

Severance: what federal law requires, and what it doesn’t

Severance isn’t required by federal law. When it comes with a release of legal claims, federal law sets minimum terms for workers 40 and older.

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General information, not legal advice. Federal rules are summarized here with their sources; your state may give you more protection, and your situation may differ.

Is severance required?

No. The federal Fair Labor Standards Act does not require severance pay. Severance is a matter of agreement between an employer and an employee, or the employee’s representative such as a union. (U.S. Department of Labor)

If an employer-sponsored severance plan exists and benefits weren’t paid under it, the Labor Department’s Employee Benefits Security Administration (EBSA) may be able to assist. (U.S. Department of Labor)

Releases of age-discrimination claims (workers 40 and older)

Severance offers often come with an agreement to give up legal claims. Under the Older Workers Benefit Protection Act, a waiver of federal age-discrimination claims is valid only if, at a minimum, it meets every one of these conditions (29 U.S.C. § 626(f)(1)):

  • It is written in a manner the worker, or the average eligible worker, can understand.
  • It refers specifically to rights or claims under the federal age-discrimination law.
  • It does not waive claims that arise after it is signed.
  • It is given in exchange for something of value beyond what the worker is already entitled to.
  • It advises the worker in writing to consult an attorney before signing.
  • It gives the worker at least 21 days to consider it, or at least 45 days when the offer is part of a program for a group of employees.
  • It allows the worker to revoke it for at least 7 days after signing, and does not take effect until that period ends.
  • For a group program, it comes with written information about who is covered and the job titles and ages of those selected and not selected.

The EEOC adds that the 21-day period runs from the employer’s final offer, restarts if the offer changes materially, and that the 7-day revocation period cannot be changed or waived. (EEOC)

Who this covers: workers 40 and older, employers with 20 or more employees (the federal age-discrimination law’s definition of employer), and waivers of federal age-discrimination claims only. (29 U.S.C. § 630(b)) Releases of other claims, and workers under 40, are governed by other federal and state law, which these rules don’t describe.

Sources

  1. Severance Pay, U.S. Department of Labor
  2. 29 U.S. Code § 626(f): Waiver (Older Workers Benefit Protection Act), Legal Information Institute, Cornell Law School
  3. 29 U.S. Code § 630(b): Definition of employer (Age Discrimination in Employment Act), Legal Information Institute, Cornell Law School
  4. Q&A: Understanding Waivers of Discrimination Claims in Employee Severance Agreements, U.S. Equal Employment Opportunity Commission

Checked against these sources on October 11, 2026. This guide explains general federal rules and is not legal advice. Your state may give you more protection.