Federal law does not require severance after a PIP, but your employer's ERISA-governed severance plan, OWBPA protections if you're 40+, or a coincident WARN-triggering layoff may give you a real legal claim — not just goodwill leverage.
Layoff during pregnancy or parental leave is not per se illegal, but the Pregnant Workers Fairness Act (42 U.S.C. § 2000gg, effective June 27 2023), the Pregnancy Discrimination Act, and FMLA reinstatement rights create strong negotiation leverage and viable discrimination claims if pregnancy was a factor in selection.
An H-1B worker who is involuntarily separated has 60 days from the last day of work to find a new sponsor, change status, or depart (8 CFR 214.1(l)(2)). Severance paid as wages does NOT extend the grace period, but garden-leave structures (continued employment through the notice period) can.
Resigning with a "mutual separation" offer typically forfeits unemployment eligibility in most states and may disqualify you from your employer's ERISA severance plan; a layoff designation preserves both. Negotiate the designation, not just the dollar amount.
Executive severance above 3× your 5-year average compensation triggers IRC § 280G's 20% excise tax (§ 4999) on the excess and makes the excess non-deductible to the company. Cumulative supplemental wages above $1,000,000 in a year are withheld at 37% federally instead of 22%.
Unvested RSUs forfeit by default at termination unless your grant agreement or negotiated severance agreement provides for acceleration; vested but unsettled RSUs from prior tranches remain yours but may be withheld during dispute periods.
Garden leave keeps you employed (on payroll, with benefits, no separation date) but away from work; severance treats you as separated immediately. The structural difference affects federal/state withholding rates, benefits continuation, unemployment eligibility, and non-compete consideration under state laws like Mass. Gen. Laws c. 149 § 24L.
The FTC's federal non-compete ban was vacated by Ryan LLC v. FTC (N.D. Tex. Aug 2024) and formally removed from the Code of Federal Regulations on February 12, 2026, so state law governs enforcement. California, Minnesota, North Dakota, and Oklahoma already void most non-competes by statute.
ACA marketplace coverage is almost always cheaper than COBRA after a layoff because severance income often qualifies for premium tax credits under IRC § 36B — but you have only 60 days from coverage loss to enroll under the Special Enrollment Period (SEP).
Lump-sum severance generally does NOT delay unemployment benefits, but severance paid as "wages in lieu of notice" tied to a specific time period typically does delay benefits during that period — the rules vary by state (e.g., NY Lab. Law § 591(6) has a 30-day disclosure window; FL Stat. § 443.101(3) treats lump sums favorably).