Louisiana Severance — 3% Flat Tax, § 23:921 Parish-Specific Non-Compete, 2026

Louisiana WARN: what applies#

Louisiana has no state-level mini-WARN notice statute. The operative layoff-notice regime for Louisiana private employers is federal WARN (29 U.S.C. §§ 2101–2109): employers with 100 or more full-time employees must give 60 days advance written notice for a mass layoff (50+ affected at a single site of employment that constitutes at least 33% of the active workforce, or 500+ regardless of percentage) or a plant closing. Notice must go to affected employees (or their representatives), the Louisiana Workforce Commission Rapid Response unit, and the chief elected official of the local government. Liability for non-compliance is back pay and benefits for each day notice was not given, up to 60 days, plus a civil penalty of up to $500 per day payable to the local government. Louisiana adds no shorter notice, no lower employer-size trigger, and no statutory severance mandate beyond federal WARN.

How severance is taxed in Louisiana#

Louisiana converted to a SINGLE FLAT 3.0% individual income tax rate effective January 1, 2025 under Act 11 (H.B. 10) of the 2024 Louisiana Second Extraordinary Session, signed by Governor Landry in December 2024 — codified at La. R.S. 47:32(A). The reform replaced the prior three-bracket graduated structure (1.85% / 3.5% / 4.25%) with a single 3.0% rate, and simultaneously increased the standard deduction to $12,500 single / $25,000 MFJ for taxable years beginning on or after January 1, 2025. The same 3.0% flat rate continues for tax year 2026. Because Louisiana uses a flat rate, the 3.0% applies uniformly to all wages — there is no separate supplemental withholding rate distinct from the regular rate. Severance, bonuses, and commissions are withheld at the same 3.0% rate as regular wages under the Louisiana DOR 2026 withholding tables (issued under La. R.S. 47:111, Employer's duty to withhold). On top of Louisiana state withholding, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). Louisiana has no state disability insurance, no statewide paid family leave premium, and no statewide transit tax.

Calculate your situation#

Inputs default to Louisiana; adjust to your specifics.

FAQ#

Does Louisiana require severance pay?

No Louisiana statute requires private employers to pay severance. Louisiana has no mini-WARN that would mandate pay-in-lieu of notice. The only layoff-notice regime that carries teeth in Louisiana is federal WARN (29 U.S.C. §§ 2101–2109), which requires 60 days advance notice (or back pay for missed days) at employers of 100+ for covered mass layoffs and plant closings — but WARN mandates notice, not severance. Severance is therefore employer-discretionary in Louisiana unless your employment agreement, written severance plan, or company handbook makes it mandatory. Louisiana is an at-will employment state.

How is severance taxed in Louisiana?

Louisiana converted to a SINGLE FLAT 3.0% individual income tax rate effective January 1, 2025 under Act 11 (H.B. 10) of the 2024 Louisiana Second Extraordinary Session — codified at La. R.S. 47:32(A). The reform replaced the prior graduated structure (1.85% / 3.5% / 4.25%) with a single 3.0% rate and raised the standard deduction to $12,500 single / $25,000 MFJ. The same 3.0% flat rate applies for tax year 2026. Because Louisiana uses a flat rate, the 3.0% applies uniformly to all wages — there is no separate supplemental withholding rate distinct from the regular rate. Severance, bonuses, and commissions are withheld at the same 3.0% rate as regular wages under the Louisiana DOR 2026 withholding tables. On top of Louisiana state withholding, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). Year-end Louisiana liability is reconciled on Form IT-540.

Does Louisiana have a mini-WARN statute?

No. Louisiana has no state-level mini-WARN that imposes employer notice obligations independent of federal WARN. The operative regime is federal WARN (29 U.S.C. §§ 2101–2109): 60 days advance notice at employers of 100+ for mass layoffs affecting 50+ at a single site that constitute at least 33% of the active workforce (or 500+ regardless of percentage). Notice goes to affected employees, the Louisiana Workforce Commission Rapid Response unit, and the chief elected local official. Federal WARN penalties: back pay and benefits for each day notice was not given (up to 60 days), plus a $500/day civil penalty payable to the local government. Louisiana adds no shorter notice, no lower employer-size trigger, and no statutory severance mandate.

Does OWBPA apply in Louisiana?

Yes. OWBPA is federal (29 U.S.C. § 626(f)) and applies in all states. If you are age 40 or older and your Louisiana employer asks you to sign a waiver of age-discrimination claims under the ADEA in your severance agreement, the waiver is enforceable only if you receive at least 21 days to consider the agreement (45 days for group exits — a 'reduction in force' or 'exit incentive program'), 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. The Louisiana Employment Discrimination Law (La. R.S. 23:301 et seq.) separately prohibits age discrimination by employers with 20 or more employees — the same employer-size threshold as the federal ADEA. A release of state-law age claims under the LEDL does not require OWBPA-compliant 21/45/7 procedures, but the federal ADEA release portion still does.

Can I collect Louisiana unemployment while receiving severance?

It depends on how the severance is structured. Louisiana's unemployment disqualification rules are at La. R.S. 23:1601 (Disqualification for benefits). In practice, the Louisiana Workforce Commission (LWC) treats severance pay based on allocation: severance designated as 'wages in lieu of notice' or salary continuation tied to a specific notice period typically offsets UI benefits week-by-week during the allocated weeks; a lump-sum severance not designated to specific weeks is more likely to be allocated to the separation date. Practical takeaways: (a) file your LA UI claim with LWC on or shortly after your last day worked at laworks.net to establish your benefit year; (b) fully disclose the severance amount, structure, and any employer designation when you apply and on weekly certifications — failure to report severance is fraud; (c) confirm the current Louisiana UI maximum weekly benefit amount with LWC before relying on net-of-benefits figures.

Are non-competes enforceable in Louisiana after a layoff?

Only if narrowly drafted to fit La. R.S. 23:921's strict statutory exceptions. Louisiana's non-compete framework is FUNDAMENTALLY DIFFERENT from common-law reasonableness states. Under La. R.S. 23:921(A)(1), 'every contract or agreement, or provision thereof, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, except as provided in this Section, shall be null and void' — the statute begins with a presumption of UNENFORCEABILITY. Section 23:921(C) then permits employer-employee non-competes ONLY IF the agreement satisfies ALL four elements: (1) is IN WRITING; (2) SPECIFIES BY NAME OR DESCRIPTION the parishes, municipalities, or parts thereof in which the employee is restrained from competing — a covenant that merely references 'the state of Louisiana,' 'within 100 miles,' or 'all of the United States' without naming specific parishes/municipalities is UNENFORCEABLE on its face; (3) restricts the employee for NO MORE THAN TWO YEARS from termination of employment; and (4) restrains the employee only in the same or 'similar business' as the employer. Louisiana courts have historically applied § 23:921 strictly — the parish/municipality specificity requirement is a hard-line bright-line test, and Louisiana courts have generally declined to blue-pencil or judicially modify overbroad non-competes (treating defective covenants as void in their entirety). Act 4 of 2020 added some limited reformation authority — verify current text via legis.la.gov. Practical takeaway: examine your Louisiana non-compete for (a) writing requirement, (b) explicit parish/municipality enumeration, (c) ≤ 2-year duration from termination, and (d) same/similar business limit — if ANY element is missing, the covenant is likely void on its face and the non-compete release clause in your severance offer may be releasing nothing of real value. Louisiana also has separate § 23:921 provisions for customer non-solicits, non-solicits of employees, and franchise/business-sale non-competes — each with its own rules. Have a Louisiana attorney review before signing.

How does Louisiana's flat 3% rate compare to the prior graduated structure?

Louisiana's flat 3.0% rate (effective Jan 1, 2025) is a sharp simplification from the prior graduated structure of 1.85% (up to $12,500 single / $25,000 MFJ), 3.5% (next bracket), and 4.25% top bracket above $50,000 single / $100,000 MFJ. For a severance-recipient earner previously in the 4.25% top bracket, the flat 3.0% rate is a 1.25-percentage-point reduction — for a $50,000 severance that's $625 less Louisiana tax on the severance check, before federal taxes and FICA. The reform also raised the standard deduction to $12,500 single / $25,000 MFJ (from $4,500 / $9,000 previously), so lower-income severance recipients see a further benefit. Verify current Louisiana DOR withholding tables and any subsequent legislative changes at revenue.louisiana.gov before relying on net-of-tax figures.