Severance Glossary
WARN Act
The federal Worker Adjustment and Retraining Notification Act requires employers of 100 or more employees to give 60 days advance written notice before a mass layoff or plant closing. Notice must go to affected workers, the state dislocated-worker unit, and the chief elected local official. If the employer shortens the notice period, it must pay wages and benefits for the days of notice not given.
Source: 29 U.S.C. ch. 23 (§§ 2101–2109)
Related: Mass layoff · Plant closing · Cal-WARN · NYS-WARN
OWBPA
The Older Workers Benefit Protection Act amends the ADEA. When an employer asks an employee age 40 or older to waive age-discrimination claims in a severance agreement, the waiver is enforceable only if the employee receives 21 days to consider it (45 days for group exits) and 7 days after signing to revoke. Group exits additionally require disclosure of the ages and job titles of all selected and non-selected employees in the decisional unit.
Source: 29 U.S.C. § 626(f)
Related: ADEA
Section 280G
IRC § 280G governs "golden parachute" payments to disqualified individuals — officers, 1%-or-more shareholders, and highly compensated employees — that are contingent on a change in control. If total parachute payments reach or exceed 3× the individual's base amount (5-year average W-2 compensation), the excess over 1× base amount is non-deductible to the company and the recipient owes an additional 20% excise tax under § 4999.
Source: 26 U.S.C. § 280G
Supplemental wage
An IRS classification for wages paid outside the regular payroll cycle, including severance, bonuses, commissions, back pay, and RSU vesting income. Employers withhold federal income tax at a flat 22% on supplemental wages up to $1,000,000 cumulative per employee per year and at 37% on any amounts above that threshold. FICA (Social Security and Medicare) applies normally.
Source: IRS Publication 15 (Circular E)
Related: RSU (Restricted Stock Unit)
COBRA
A federal continuation-of-coverage right under ERISA. After a qualifying event — involuntary termination for reasons other than gross misconduct, or a reduction in hours — an employee of an employer with 20 or more employees may elect to continue group health coverage for up to 18 months. The employee pays the full premium (both the employer's and employee's share) plus a 2% administrative fee.
Source: 29 U.S.C. § 1161
ADEA
The Age Discrimination in Employment Act of 1967 prohibits employment discrimination against workers age 40 and older. It applies to employers with 20 or more employees. A severance agreement that asks an employee to waive ADEA claims must satisfy OWBPA's procedural requirements — a 21-day (or 45-day for group exits) consideration period and a 7-day revocation right — or the waiver is unenforceable.
Source: 29 U.S.C. § 621
Related: OWBPA
At-will employment
The default US employment rule: absent a contract or statute to the contrary, either party can end the employment relationship at any time, for any reason or no reason, without notice. Exceptions include employment contracts, collective bargaining agreements, anti-discrimination and anti-retaliation statutes, and public-policy exceptions recognized by most states. Montana is the only state that has abolished pure at-will employment by statute (Mont. Code § 39-2-904).
Mass layoff
A WARN Act statutory term. A reduction in force at a single site of employment that, during any 30-day period, results in employment loss for either 500 or more full-time employees, or 50–499 full-time employees if they constitute at least 33% of the active workforce. Meeting either threshold triggers federal WARN notice obligations for covered employers.
Source: 29 U.S.C. § 2101(a)(3)
Related: WARN Act · Plant closing
Plant closing
A WARN Act statutory term. The permanent or temporary shutdown of a single site of employment — or one or more facilities or operating units within a site — that results in employment loss for 50 or more full-time employees during any 30-day period. Plant-closing WARN notice is required independently of whether the mass-layoff test is met.
Source: 29 U.S.C. § 2101(a)(2)
Related: WARN Act · Mass layoff
Garden leave
A period during which a departing employee remains on the payroll and receives salary and benefits but is not required — and usually not permitted — to perform work or access company systems. It is used to keep the employee away from competitors during a notice period or to satisfy state non-compete consideration requirements. Massachusetts requires garden leave or equivalent consideration to enforce a post-employment noncompete (Mass. Gen. Laws c. 149 § 24L).
Source: Mass. Gen. Laws c. 149 § 24L
Related: Non-compete release
RSU (Restricted Stock Unit)
A promise by the employer to deliver shares (or a cash equivalent) on a future vesting date, conditioned on continued employment. Unvested RSUs typically forfeit at termination unless the grant agreement or a severance agreement provides for acceleration. At vesting, the fair market value of the shares is ordinary W-2 income subject to supplemental-wage withholding.
Source: IRS Publication 525
Related: Supplemental wage
ISO 90-day exercise window
To retain incentive stock option (ISO) tax treatment after termination, the option must be exercised within 3 months of separation (extended to 12 months for termination due to death or disability). After that window closes, any unexercised ISO automatically converts to a nonqualified stock option and loses the preferential long-term capital-gain and AMT treatment that ISOs offer.
Source: 26 U.S.C. § 422
Non-compete release
A negotiated provision in a severance agreement under which the employer waives or narrows an existing post-employment non-compete covenant in exchange for the employee signing a general release. Enforceability varies by state: California voids non-competes by statute (Cal. Bus. & Prof. Code § 16600); Minnesota, North Dakota, and Oklahoma substantially restrict them. The FTC's federal ban was vacated by Ryan LLC v. FTC (N.D. Tex. Aug 2024) and formally removed from the CFR in February 2026, so state law governs.
Source: Cal. Bus. & Prof. Code § 16600
Related: Garden leave
Cal-WARN
California's state mini-WARN statute. It applies to industrial or commercial facilities with 75 or more employees and requires 60 days advance written notice for a mass layoff (50 or more affected employees in any 30-day period), relocation (100 or more miles), or termination of operations. Cal-WARN's employee threshold is lower than federal WARN's; affected employees can recover back pay plus the value of lost benefits for each day notice was not given.
Source: Cal. Lab. Code §§ 1400–1408
Related: WARN Act · Mass layoff
NYS-WARN
New York's state mini-WARN statute. It applies to private employers with 50 or more employees in New York State and requires 90 days advance written notice — 30 days longer than federal WARN — for mass layoffs of 25 or more affected employees at a single site, plant closings, relocations, or covered reductions in hours. Both the employer-size threshold and the affected-worker threshold are lower than their federal counterparts.
Source: N.Y. Lab. Law § 860 et seq.
Related: WARN Act · Mass layoff
FMLA
The Family and Medical Leave Act entitles eligible employees of covered employers (50+ employees within 75 miles) to up to 12 weeks of unpaid, job-protected leave in a 12-month period for specified family and medical reasons. FMLA leave does not by itself trigger severance, but a termination during or immediately after protected FMLA leave can create an interference or retaliation claim that strengthens severance leverage.
Source: 29 U.S.C. ch. 28 (§§ 2601–2654)
FLSA
The Fair Labor Standards Act establishes minimum wage, overtime pay, recordkeeping, and youth employment standards. FLSA does not require severance pay; severance is a benefit governed by contract and ERISA, not by federal wage-and-hour law. FLSA still matters at termination because unpaid overtime, misclassification, or off-the-clock work claims can be released in a severance agreement — assess whether you are giving up valuable wage claims.
Source: 29 U.S.C. ch. 8 (§§ 201–219)
Related: ERISA
EEOC
The Equal Employment Opportunity Commission is the federal agency that enforces Title VII, the ADEA, the ADA, the Equal Pay Act, GINA, and parts of the Civil Rights Act. Before suing under most of these statutes, you must file a charge with the EEOC within 180 days (or 300 days where a state agency has a worksharing agreement). A severance agreement that waives discrimination claims releases the right to file a private lawsuit but cannot prohibit you from filing an EEOC charge or cooperating with an EEOC investigation.
Source: 42 U.S.C. § 2000e-4
ERISA
The Employee Retirement Income Security Act regulates employer-sponsored welfare and pension plans, including most written severance plans. If your employer has a formal severance plan with a Summary Plan Description, that plan is likely governed by ERISA — meaning you have a fiduciary right to its terms, a written claims procedure, and (after exhausting administrative remedies) the right to sue in federal court for benefits denied. ERISA-governed severance is a real legal entitlement, not employer discretion.
Source: 29 U.S.C. ch. 18 (§§ 1001–1461)
Title VII
Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex (including pregnancy, sexual orientation, and gender identity per Bostock v. Clayton County, 590 U.S. 644 (2020)), and national origin. Severance agreements often include a release of Title VII claims; the release is enforceable if knowing and voluntary. Like other discrimination releases, it does not bar filing a charge with the EEOC.
Source: 42 U.S.C. § 2000e et seq.
ADA
The Americans with Disabilities Act prohibits employment discrimination against qualified individuals with disabilities (covered employers have 15+ employees) and requires reasonable accommodation absent undue hardship. A termination that follows a disability disclosure or accommodation request can support an ADA claim that strengthens severance leverage. Severance releases of ADA claims must comply with general waiver standards; if the employee is 40+, the OWBPA review window also governs the parallel ADEA waiver.
Section 409A
IRC § 409A governs nonqualified deferred compensation arrangements and imposes strict timing and form-of-payment rules. Severance can be structured to comply with § 409A or to fit a short-term-deferral or separation-pay-plan exception (paid by March 15 of the year following termination, or capped at 2× compensation up to specified limits over 24 months). Non-compliant deferred severance triggers a 20% additional tax plus interest on the recipient. Executive packages, installment severance, and equity-linked separation payments most often touch § 409A.
Source: 26 U.S.C. § 409A
Related: Section 280G
Alternative Minimum Tax (AMT)
A parallel federal tax system under 26 U.S.C. § 55 that runs alongside the regular income tax — taxpayers pay the higher of the two calculations. For ISO holders, the bargain element at exercise (fair market value minus strike price) is an AMT preference item under § 56(b)(3) that adds to alternative minimum taxable income (AMTI), potentially triggering AMT liability in the exercise year even though no regular income tax is owed until sale. AMT paid on an ISO exercise generates an AMT credit (Form 8801) usable against regular tax in later years. At severance, an ISO holder considering exercise within the 90-day post-termination window must model both the regular-tax and the AMT outcome using IRS Form 6251. The key risk: exercising deep-in-the-money ISOs in a year of constrained cash flow can produce a six- or seven-figure AMT bill due in April with no offsetting cash from a sale.
Source: 26 U.S.C. § 55 — Alternative minimum tax imposed, IRS Form 6251 — Alternative Minimum Tax
Related: ISO 90-day exercise window · RSU (Restricted Stock Unit)
Pregnant Workers Fairness Act (PWFA)
Federal law effective June 27, 2023 (180 days after enactment on December 29, 2022) requiring covered employers (15 or more employees) to provide reasonable accommodations for known limitations related to pregnancy, childbirth, or related medical conditions — unless doing so would impose an undue hardship. Codified at 42 U.S.C. § 2000gg. PWFA complements but does not replace the Americans with Disabilities Act, the Pregnancy Discrimination Act, FMLA, and the PUMP for Nursing Mothers Act. The EEOC published implementing regulations effective June 18, 2024 (29 CFR Part 1636). Where layoff and pregnancy collide, PWFA can create a separate cause of action distinct from PDA / ADA / Title VII — particularly if the employer failed to engage in the interactive accommodation process before terminating.
Source: 42 U.S.C. § 2000gg — Pregnant Workers Fairness Act, EEOC — Pregnant Workers Fairness Act overview
McLaren Macomb (372 NLRB No. 58)
February 21, 2023 NLRB decision holding that severance agreements containing overbroad confidentiality and non-disparagement clauses, by their mere proffer, violate § 8(a)(1) of the National Labor Relations Act by interfering with employees' Section 7 rights to engage in protected concerted activity. McLaren Macomb, 372 NLRB No. 58 (Feb. 21, 2023), overturned the Trump-era Baylor University Medical Center and IGT decisions and restored the longstanding NLRB position that overbroad clauses chill Section 7 rights — including the right to discuss working conditions, file ULP charges, and assist coworkers — regardless of whether the employee accepts the agreement. The practical implication: confidentiality clauses must allow disclosure to legal advisors, regulators, and co-workers; non-disparagement clauses must be narrowly tailored to defamatory statements. NLRB GC Memo 23-05 (enforcement guidance) was rescinded February 14, 2025 by GC 25-05, but the Board decision itself remains binding NLRB precedent.
Source: NLRB McLaren Macomb, 372 NLRB No. 58 (Feb. 21, 2023) — case docket
Related: Non-disparagement clause · Confidentiality clause · Release of claims
Severance pay
A payment, or stream of payments, made by an employer to a departing employee upon termination of employment. Severance is not required by federal law — the Fair Labor Standards Act does not mandate it (29 U.S.C. ch. 8), and the Supreme Court in Commissioner v. Schleier, 515 U.S. 323 (1995), treated it as ordinary income rather than a tort recovery. It is owed only where contract, an ERISA-governed plan document, an employee handbook with binding language, a collective bargaining agreement, or a state statute (e.g., Maine's 26 M.R.S. § 625-B for plant closings) requires it. Typical severance formulas pay one to four weeks of base salary per year of service, often with a floor (e.g., 4 weeks) and a cap (e.g., 26 or 52 weeks). Executive packages frequently use months-of-salary multiples plus a pro-rata target bonus and equity acceleration. Severance pay is taxed as supplemental wages (22% federal flat withholding up to $1M; 37% above) and is subject to FICA. It does not extend the employer's W-2 reporting period — the termination date for benefits purposes is still the actual last day of work unless the agreement says otherwise.
Source: DOL — Severance Pay (no federal requirement), 26 M.R.S. § 625-B — Maine plant closing severance
Related: Release of claims · Supplemental wage · ERISA · WARN Act
Release of claims
A contract provision in which the employee gives up the right to sue the employer (and usually its officers, directors, affiliates, and successors) for any claim arising out of the employment relationship, in exchange for severance consideration. The release is the core legal exchange of every severance agreement: the employer is buying litigation peace, and the employee is selling claims they may or may not know they have. A general release covers all claims to the extent permitted by law. It cannot waive: (1) future claims that have not yet arisen, (2) claims for unemployment insurance or workers' compensation in most states, (3) vested retirement benefits under ERISA, (4) the right to file a charge with the EEOC, NLRB, SEC, or OSHA, or (5) certain non-waivable wage claims under the FLSA absent DOL or court supervision. ADEA waivers by employees age 40+ must additionally satisfy OWBPA's 21/45-day consideration and 7-day revocation requirements (29 U.S.C. § 626(f)). Post-McLaren Macomb (372 NLRB No. 58), overbroad releases that purport to silence Section 7 activity may be unenforceable in part.
Source: 29 U.S.C. § 626(f) — OWBPA waiver requirements, EEOC — Understanding Waivers of Discrimination Claims in Employee Severance Agreements
Related: OWBPA · Severance pay · EEOC · McLaren Macomb (372 NLRB No. 58)
No-rehire clause
A provision under which the departing employee agrees never to apply for, or accept, future employment with the employer (and often its parents, subsidiaries, and affiliates). Historically standard boilerplate, no-rehire clauses now face significant state-law headwinds, particularly when paired with the settlement of a discrimination, harassment, or retaliation claim. California Code of Civil Procedure § 1002.5, enacted via AB 749 (2019) and amended by AB 2143 (2020), prohibits no-rehire provisions in any settlement agreement with a person who has filed a claim against the employer in court, in arbitration, or through an internal complaint process — unless the employer made a good-faith determination of sexual harassment or sexual assault by the claimant. Several other states have followed (Vermont 21 V.S.A. § 495h(g); Oregon ORS 659A.370). Outside the discrimination-settlement context, no-rehire clauses in ordinary severance agreements remain generally enforceable, though courts have voided overbroad versions that purport to bar employment with future acquirers or unrelated entities.
Source: Cal. Code Civ. Proc. § 1002.5
Related: Release of claims · Non-compete release
Non-disparagement clause
A contract term restricting an employee's ability to make negative statements about the employer, its officers, products, or services after separation. Non-disparagement clauses are routine in severance agreements but their enforceability has narrowed sharply in the past three years. Under McLaren Macomb, 372 NLRB No. 58 (Feb. 21, 2023), the NLRB held that overbroad non-disparagement provisions in severance agreements offered to non-supervisory employees violate § 8(a)(1) of the NLRA — even if the employee never signs — because they chill the employee's Section 7 right to discuss working conditions and engage in protected concerted activity. The SEC Whistleblower Rule (17 CFR § 240.21F-17) independently prohibits any contract that impedes communication with the SEC about possible securities-law violations; the SEC has fined dozens of employers since 2015 for severance and confidentiality language that even arguably restricts whistleblowing. Carve-outs for truthful statements, agency communications, and statements compelled by subpoena are now standard practice.
Source: 17 CFR § 240.21F-17 — SEC Whistleblower Rule, NLRB McLaren Macomb, 372 NLRB No. 58
Related: McLaren Macomb (372 NLRB No. 58) · Confidentiality clause · Release of claims
Confidentiality clause
A severance-agreement provision restricting the employee from disclosing the existence, terms, or amount of the severance, and often the underlying facts of the separation. Confidentiality clauses overlap with — but are distinct from — trade-secret and proprietary-information covenants signed at hire. Three federal statutes now meaningfully limit confidentiality in severance: (1) the Speak Out Act, 42 U.S.C. § 19402 (2022), voids pre-dispute nondisclosure and non-disparagement clauses with respect to sexual-assault and sexual-harassment disputes; (2) section 13307 of the Tax Cuts and Jobs Act, codified at 26 U.S.C. § 162(q), denies employers a tax deduction for settlement payments and related attorneys' fees if the agreement contains a nondisclosure clause covering sexual harassment or sexual abuse; (3) the SEC Whistleblower Rule (17 CFR § 240.21F-17) prohibits language that impedes reporting securities violations. Several states (CA, NJ, NY, WA, IL) further restrict confidentiality for harassment, discrimination, and retaliation claims by statute. Post-McLaren Macomb, confidentiality clauses must permit disclosure to legal advisors, regulators, family, and (for non-supervisors) coworkers discussing working conditions.
Source: 42 U.S.C. § 19402 — Speak Out Act, 26 U.S.C. § 162(q) — No deduction for settlements subject to NDA
Related: Speak Out Act · Non-disparagement clause · McLaren Macomb (372 NLRB No. 58)
Speak Out Act
Federal statute signed December 7, 2022, codified at 42 U.S.C. §§ 19401–19403, that renders judicially unenforceable any pre-dispute nondisclosure clause or pre-dispute non-disparagement clause with respect to a dispute involving sexual assault or sexual harassment. "Pre-dispute" means agreed to before the dispute arises — so it primarily reaches NDAs signed at hire, in onboarding paperwork, or in confidentiality agreements that pre-date the alleged conduct. The Speak Out Act is narrower than the related Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (9 U.S.C. §§ 401–402), which addresses forced arbitration of the same claims. Both statutes apply retroactively to existing contracts but only to claims that accrue on or after the enactment date. The Speak Out Act does not invalidate post-dispute NDAs in severance agreements — meaning an employee who has already complained about sexual harassment can still sign a settlement-confidentiality clause, subject to the § 162(q) deduction limit and applicable state law.
Source: 42 U.S.C. § 19402 — Speak Out Act prohibition, 9 U.S.C. § 402 — Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act
Related: Confidentiality clause · Non-disparagement clause · Title VII
Cooperation clause
A provision obligating the former employee to assist the employer with ongoing or future litigation, regulatory inquiries, and internal investigations after separation — typically by being available for interviews, sitting for depositions, producing relevant documents, and testifying at trial. Cooperation clauses are routine in executive and finance-industry severance and increasingly common in mid-level packages. Enforceable cooperation clauses must avoid two pitfalls. First, they cannot dictate the substance of testimony — a clause requiring the employee to "support" the employer's position would be unenforceable as a violation of public policy and could constitute witness tampering under 18 U.S.C. § 1512. Truthful-testimony carve-outs are essential. Second, they must address compensation: federal courts have held that paying a fact witness for testimony (beyond reasonable expenses and lost wages at the witness's normal rate under ABA Model Rule 3.4(b)) is impermissible. Best-practice clauses cap the time commitment, reimburse documented expenses, and pay a reasonable hourly rate (often pegged to the employee's final salary) for time spent beyond a de minimis threshold.
Source: 18 U.S.C. § 1512 — Tampering with a witness
Related: Release of claims · Confidentiality clause
Outplacement services
Employer-paid career-transition services — résumé review, interview coaching, LinkedIn optimization, job-search platforms, and sometimes 1:1 executive coaching — provided to departing employees as part of a severance package. Major providers include Lee Hecht Harrison (LHH), Right Management, Randstad RiseSmart, and INTOO. Tiered packages typically run 1 to 12 months; senior-executive engagements can run 12 to 24 months with dedicated coaching. For tax purposes, qualified outplacement services provided by the employer to facilitate the employee's search for new employment are generally excludable from the departing employee's gross income as a working-condition fringe benefit under 26 U.S.C. § 132(d), provided the employee would have been entitled to a deduction had they paid for the service while still employed (and the services are not provided in lieu of taxable severance the employee could have chosen to receive in cash). Outplacement value is therefore an attractive negotiation lever — a $5,000 retail-price executive coaching package adds full pre-tax value, unlike an equivalent cash bump that would be taxed at supplemental-wage rates plus FICA.
Source: 26 U.S.C. § 132 — Certain fringe benefits, IRS Publication 15-B — Employer's Tax Guide to Fringe Benefits
Related: Severance pay · Supplemental wage
HSA and FSA at termination
Health Savings Accounts (HSAs) and Health Flexible Spending Arrangements (Health FSAs) follow fundamentally different rules at separation. An HSA under 26 U.S.C. § 223 is individually owned — the full balance, including all employer contributions, is portable, retains its tax-favored status indefinitely, and can be spent on qualified medical expenses for the rest of the accountholder's life. Severance does not affect HSA ownership; the employee simply notifies the HSA custodian of the new mailing address. Health FSAs under 26 U.S.C. § 125 are employer-sponsored "use it or lose it" arrangements. At termination, unspent FSA funds are generally forfeited unless the employee elects COBRA continuation coverage for the FSA itself. COBRA-FSA election is only economically rational where the employee has contributed more than they have spent — the rule under IRS Notice 2015-87 and Treas. Reg. § 54.4980B-2 Q&A-8 allows employers to limit FSA COBRA to the year of termination and only if the employee has a positive balance. Dependent Care FSAs (under § 129) are not COBRA-eligible; unspent dependent-care balances are forfeited at separation unless used for qualifying expenses incurred before termination and submitted within the plan's run-out period.
Source: 26 U.S.C. § 223 — Health savings accounts, 26 U.S.C. § 125 — Cafeteria plans
DEI-related RIF and proxy discrimination
A reduction-in-force that disproportionately impacts a protected class — by race, sex, age, national origin, or disability — even when the employer's stated selection criteria are facially neutral. Title VII disparate-impact analysis under 42 U.S.C. § 2000e-2(k) and the OFCCP's adverse-impact framework remain the operative standards. The Supreme Court's decision in Muldrow v. City of St. Louis, 601 U.S. 346 (2024), eliminated the requirement that a Title VII plaintiff show a "materially significant" or "tangible" harm from an adverse employment action, lowering the bar to "some harm" with respect to an identifiable term or condition of employment. Combined with Bostock v. Clayton County, 590 U.S. 644 (2020) (sex includes sexual orientation and gender identity) and Students for Fair Admissions v. Harvard, 600 U.S. 181 (2023) (constraining race-conscious remedies), the post-Muldrow landscape makes disparate-impact RIF analysis a more potent severance-negotiation lever. Practical implications: where pre-RIF statistical analysis shows adverse impact against a protected class, severance leverage for selected individuals in that class is materially higher; group exits already trigger OWBPA disclosure of ages and titles in the decisional unit (29 U.S.C. § 626(f)(1)(H)).
Source: 42 U.S.C. § 2000e-2(k) — Burden of proof in disparate impact cases, Muldrow v. City of St. Louis, 601 U.S. 346 (2024)
WARN trigger calculation
The mechanical analysis that determines whether a workforce reduction triggers WARN Act notice obligations. Three counts matter: (1) the employer-size test — 100 or more full-time employees, or 100 or more full- and part-time employees who in aggregate work at least 4,000 hours per week exclusive of overtime, under 29 U.S.C. § 2101(a)(1); (2) the affected-worker test — 50 to 499 full-time employees if they constitute 33% or more of the active full-time workforce, or 500 or more full-time employees regardless of percentage, for a "mass layoff," or 50 or more full-time employees for a "plant closing"; (3) the aggregation window — employment losses within any 30-day period, extended to 90 days where the employer's separate actions are not the result of separate and distinct causes (29 U.S.C. § 2102(d)). The 90-day aggregation rule is the most frequently litigated piece: stringing together small RIFs within a quarter to stay below the 50-worker threshold does not avoid WARN unless the employer can prove each tranche was caused by independent business reasons. "Employment loss" includes terminations (other than discharge for cause, voluntary departure, or retirement), layoffs exceeding 6 months, and reductions of more than 50% in working hours for each month of any 6-month period (29 U.S.C. § 2101(a)(6)). State mini-WARN laws (Cal-WARN, NYS-WARN, NJ-WARN) often use lower thresholds and longer notice periods, and the trigger analysis must be run independently under each applicable statute.
Source: 29 U.S.C. § 2101 — WARN Act definitions, 29 U.S.C. § 2102 — WARN Act notice requirements
Related: WARN Act · Mass layoff · Plant closing · Cal-WARN · NYS-WARN
Right-to-sue notice
A "Notice of Right to Sue" issued by the EEOC (or by the relevant state Fair Employment Practices Agency under a worksharing agreement) terminates the agency's administrative process and triggers a 90-day deadline within which the charging party must file a civil action in federal court under Title VII, the ADA, GINA, or the ADEA (29 U.S.C. § 626(e) for ADEA). Missing the 90-day window extinguishes the federal claim regardless of merit. Under 42 U.S.C. § 2000e-5(f)(1) and 29 CFR § 1601.28, the EEOC must issue a right-to-sue letter within 10 days of a request if 180 days have passed since the charge was filed, or earlier if the agency has determined it will not pursue the case. Strategically, an employee considering a severance offer that requires release of EEOC-eligible claims should weigh whether to request the right-to-sue notice first — the charge cannot be unfiled, but the agency's findings (a "reasonable cause" determination, in particular) materially strengthen negotiating leverage. Some state agencies (e.g., California CRD under Cal. Gov. Code § 12965) have parallel state right-to-sue procedures with their own 1-year limitations period for FEHA claims, distinct from the federal 90-day window.
Source: 42 U.S.C. § 2000e-5(f)(1) — Civil action and right to sue, 29 CFR § 1601.28 — Notice of right to sue
Pension early-retirement window
A time-limited enhancement to a defined-benefit pension plan offered during a workforce reduction, typically providing one or more of: (1) added years of service credit, (2) elimination of the early-retirement actuarial reduction, (3) a subsidized early-retirement supplement bridging to Social Security, or (4) a lump-sum payout option. Window benefits are designed to encourage voluntary departures and reduce the need for involuntary layoffs. Window programs implicate three regulatory regimes. First, ERISA § 204(h) (29 U.S.C. § 1054(h)) requires 45 days' advance written notice of any plan amendment that significantly reduces future benefit accruals — but enhancements do not trigger this rule. Second, ADEA / OWBPA waiver requirements (29 U.S.C. § 626(f)) apply with full force to any release attached to a window offer: 45-day consideration period, 7-day revocation, and disclosure of the decisional unit's ages and titles, because window offers tied to severance are "group exit" programs. Third, IRC § 401(a)(4) nondiscrimination testing requires that the enhanced benefits not disproportionately favor highly compensated employees. Employees evaluating a window offer should model the lifetime value of the enhanced annuity versus the lump-sum option using current PBGC interest-rate assumptions, and check whether accepting the window forfeits any retiree-medical subsidy.
Source: 29 U.S.C. § 1054 — ERISA benefit accrual requirements, 26 U.S.C. § 401(a)(4) — Nondiscrimination in benefits
Related: ERISA · OWBPA · ADEA · Severance pay