Severance Pay Calculator

What sets severance pay

This page read the WARN Act's definitions, its notice rule and its remedy, and none of them requires an employer to pay severance. It found no other federal statute that does. So the first part of the calculator does not apply a law: it takes the weeks of pay per year of service that your plan, offer letter or agreement states, your years of service and your weekly pay, and multiplies them.

Read the plan's own words for what counts as a year of service, whether a partial year counts, and whether pay means base pay alone. Enter the figures the way the plan defines them, and the calculator's product is the plan's figure.

A plan figure and WARN Act back pay are different things. The Act reduces what an employer owes by some payments it makes, quoted below, so the two can interact, and the calculator shows them apart.

Severance pay and the WARN Act: who is covered

The Act applies to an employer, a business enterprise that employs either “100 or more employees, excluding part-time employees;” (29 U.S.C. § 2101(a)(1)(A)) or “100 or more employees who in the aggregate work at least 4,000 hours per week (exclusive of hours of overtime);” (29 U.S.C. § 2101(a)(1)(B))

A part-time employee is left out of those counts, and the Act defines one: the term “means an employee who is employed for an average of fewer than 20 hours per week or who has been employed for fewer than 6 of the 12 months preceding the date on which notice is required.” (29 U.S.C. § 2101(a)(8))

The Act covers two events. A plant closing “means the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees excluding any part-time employees;” (29 U.S.C. § 2101(a)(2))

A mass layoff is a reduction in force which “is not the result of a plant closing; and (B) results in an employment loss at the single site of employment during any 30-day period for” (29 U.S.C. § 2101(a)(3)) either “at least 33 percent of the employees (excluding any part-time employees); and” (29 U.S.C. § 2101(a)(3)(B)(i)(I)) “at least 50 employees (excluding any part-time employees); or” (29 U.S.C. § 2101(a)(3)(B)(i)(II)) or “at least 500 employees (excluding any part-time employees);” (29 U.S.C. § 2101(a)(3)(B)(ii))

And an employment loss, as the Act counts it, is “an employment termination, other than a discharge for cause, voluntary departure, or retirement, (B) a layoff exceeding 6 months, or (C) a reduction in hours of work of more than 50 percent during each month of any 6-month period;” (29 U.S.C. § 2101(a)(6))

The calculator applies the first employer test, the plant closing test and both mass layoff tests to the numbers you enter. It does not apply the second employer test, which counts hours.

How WARN Act back pay is counted

An employer that orders a plant closing or mass layoff in violation of the notice rule is liable to each employee who suffers an employment loss for “back pay for each day of violation at a rate of compensation not less than the higher of” (29 U.S.C. § 2104(a)(1)(A)) “the average regular rate received by such employee during the last 3 years of the employee's employment; or” (29 U.S.C. § 2104(a)(1)(A)(i)) “the final regular rate received by such employee; and” (29 U.S.C. § 2104(a)(1)(A)(ii))

It is liable as well for “benefits under an employee benefit plan described in section 1002(3) of this title, including the cost of medical expenses incurred during the employment loss which would have been covered under an employee benefit plan if the employment loss had not occurred.” (29 U.S.C. § 2104(a)(1)(B)) The calculator does not add benefits.

The Act limits the period: “Such liability shall be calculated for the period of the violation, up to a maximum of 60 days, but in no event for more than one-half the number of days the employee was employed by the employer.” (29 U.S.C. § 2104(a)(1))

And it reduces the amount. “The amount for which an employer is liable under paragraph (1) shall be reduced by” (29 U.S.C. § 2104(a)(2)) “any wages paid by the employer to the employee for the period of the violation;” (29 U.S.C. § 2104(a)(2)(A)) “any voluntary and unconditional payment by the employer to the employee that is not required by any legal obligation; and” (29 U.S.C. § 2104(a)(2)(B))

A court may reduce it further: “If an employer which has violated this chapter proves to the satisfaction of the court that the act or omission that violated this chapter was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of this chapter the court may, in its discretion, reduce the amount of the liability or penalty provided for in this section.” (29 U.S.C. § 2104(a)(4))

The sections read do not define a day of violation. The calculator counts the days of notice you were short of the period the Act requires, and whether those are calendar days or working days is a question for a lawyer.

A severance pay calculator example

Your plan pays 2 weeks of pay for each year of service, you worked 6 years, and your weekly pay is $1,200.00. That is 12 weeks of pay, $14,400.00.

Now say your employer has 150 full-time employees and closes your site, with no written notice, an employment loss for 80 full-time employees there. You worked there 2190 days and your daily pay is $200.00. The notice was 60 days short, the period is 60 days, and the back pay is $12,000.00.

Had the employer given 35 days of notice, the period would be 25 days and the back pay $5,000.00. Had you worked there only 90 days, one-half of that, 45 days, would be the limit, and the back pay $9,000.00.

If the employer made a voluntary and unconditional payment of $5,000.00 that no legal obligation required, the Act reduces the back pay by it, to $7,000.00. Whether a given severance payment is that kind of payment is a question for a lawyer.

What this calculator does not do

It does not read your plan for you, decide whether a payment counts as voluntary, apply the exceptions that let an employer give shorter notice, count the benefits the Act also covers, apply a state's own notice law, or apply the second test for an employer.

It applies the Act as the 2024 edition of the United States Code prints it. It read no Department of Labor web page, which this site's research could not open, and no regulation.