First, the legal reality
Severance is not a legal entitlement. The Fair Labor Standards Act does not require it, the Department of Labor's own guidance says so plainly, and no state mandates it for ordinary terminations. Severance exists because an employer chooses to buy something: usually your signature on a release waiving discrimination, wage, and other claims. That framing matters — you are not receiving a benefit, you are selling rights, and the question is whether the price is fair.
The market formula
With no statute to set the number, convention fills the gap. The dominant structure is one to two weeks of base salary per year of service, frequently with a minimum of two to four weeks and a cap around six to twelve months for senior staff. Companies with formal plans publish the schedule internally; companies without one negotiate case by case, which is where tenure, title, and circumstances start to move the number.
What a package includes beyond the paycheck
- Pay continuation — the core, either as salary continuation or a lump sum.
- Benefits continuation — employer-paid COBRA premiums for some months is the most-negotiated non-cash term.
- Accrued PTO payout — often legally required anyway (see severance vs. final pay); do not let it be counted as "severance."
- Equity treatment — accelerated vesting or extended exercise windows for stock options.
- Outplacement, references, non-disparagement — cheap for the employer, valuable for you.
The release is the real transaction
Read what you are waiving. Releases typically cover every claim known and unknown, and for workers 40 and over the Older Workers Benefit Protection Act requires specific disclosures and at least 21 days to consider (7 days to revoke after signing) for an age-discrimination waiver to be valid. That statutory clock is also your negotiating window. Estimate a conventional range with the Severance & Wrongful Termination Estimator, weigh it against any potential claims you would be waiving, and consider having an employment attorney review the agreement — the consultation is often flat-fee and the signature is permanent.
A worked example
A salaried employee earning $120,000 with six years of service is laid off by a company with no published plan. Weekly base pay is $120,000 ÷ 52 ≈ $2,308. The convention of one to two weeks per year of service gives a starting band of six weeks (≈ $13,850) to twelve weeks (≈ $27,700); the two-to-four-week minimum that many plans carry does not bind here. Where she lands in that band depends on the leverage factors — how the termination happened, what claims plausibly exist, how replaceable she is — covered in factors that affect severance. Hypothetical illustration; published plans, executive tiers, and state mini-WARN mandates can all move the number outside the convention.
Lump sum versus salary continuation
The same headline weeks can be delivered two ways, and the difference is practical rather than arithmetic. A lump sum cuts ties cleanly: no payroll entanglement, no "employed through" date on applications, taxes withheld up front. Salary continuation pays on the normal payroll cadence, which can preserve benefit eligibility and internal seniority dates, but keeps you technically on the rolls — which matters for start-date representations at a new job and for how unemployment eligibility is timed in your state. Ask which structure the offer uses before comparing it to any other number; "eight weeks" is not one thing.
Severance and unemployment benefits
Two clarifications prevent the most common panic. First, a release generally cannot waive your right to apply for unemployment insurance — those rights belong to the state system, not the employer, and clauses purporting to trade them are unenforceable in most states. Second, severance usually does not disqualify you from benefits, but some states defer the start of eligibility by allocating a lump sum across weeks; rules differ state by state. Ask the question before agreeing on the payment structure — a lump sum paid on a specific date versus continuation spread over months can change when your unemployment claim effectively begins. Your state's workforce agency answers this definitively and free.
The statutory clock as negotiating window
For workers 40 and over, the Older Workers Benefit Protection Act's 21-day consideration and 7-day revocation windows are not bureaucratic padding — they are the legally sanctioned space to do everything this guide describes: price the formula, inventory the claims, verify the state variables, and consult an attorney. An employer pressuring a signature inside that window is creating evidence, not urgency. Use the full window even when the offer feels fair; the state-level rules that complete the picture are in state employment considerations.