Severance pay explained

The Department of Labor says severance pay is often granted to employees when their employment ends. It is usually based on how long you worked for the employer.

The Fair Labor Standards Act (FLSA), the federal law on wages, has no requirement for severance pay.

Severance pay is a matter of agreement between an employer and an employee, or the employee's representative. So the terms come from your agreement, your contract or your employer's plan, not from a federal rule.

If you did not get severance that was due to you under your employer's plan, the Employee Benefits Security Administration (EBSA) at the Department of Labor may be able to help.

Your last paycheck is not severance. The Department of Labor says federal law does not require employers to give former employees their final paycheck right away, but some states do.

If the regular payday for your last pay period has passed and you have not been paid, contact the Department of Labor's Wage and Hour Division or your state's labor department.

The IRS says you must include severance pay in your income. Severance payments are wages subject to social security and Medicare taxes, and they are subject to income tax withholding.

Each state runs its own unemployment insurance program, with its own rules. To learn how your state treats severance pay when you claim benefits, ask your state's unemployment office. CareerOneStop's finder lists each state's office.

The federal WARN Act requires some employers to give notice before a plant closing or mass layoff. The Department of Labor says the Act helps ensure advance notice of qualified plant closings and mass layoffs.

NewsIntel reads the WARN lists that state labor agencies publish and links every notice to the list it came from. Look for your employer there.