Oregon Severance — Non-Compete Limits, Workplace Fairness, 8% Tax, 2026

Oregon WARN: what applies#

Oregon has no state mini-WARN statute. The operative layoff-notice regime for private Oregon 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 or more affected at a single site of employment that constitutes at least 33% of the active workforce, or 500 or more regardless of percentage) or a plant closing. Notice must go to affected employees (or their representatives), the state dislocated-worker unit (the Oregon Higher Education Coordinating Commission Rapid Response team coordinates with the Oregon Employment Department), 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. Oregon adds no shorter notice, no lower employer-size trigger, and no statutory severance mandate.

How severance is taxed in Oregon#

Oregon has a graduated personal income tax with four 2026 brackets — 4.75%, 6.75%, 8.75%, and 9.9% — but for supplemental wages paid separately from regular wages, the Oregon Department of Revenue authorizes employers to use a flat 8% withholding rate under Form 150-206-436 (Rev. 12-31-25). Supplemental wages include severance, bonuses, commissions, and any payment received in addition to the regular paycheck. Employers may alternatively aggregate the supplemental payment with the most recent regular paycheck and withhold using the standard tables. On top of Oregon 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% up to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). Year-end Oregon liability is reconciled on Form OR-40 — if your total taxable income lands in the 8.75% or 9.9% bracket, the 8% withheld at payment will under-withhold and you will owe the difference. Note: Oregon has no state sales tax, but residents also owe Paid Leave Oregon (0.60% employee share) and the Statewide Transit Tax (0.10%) on wages.

Calculate your situation#

Inputs default to Oregon; adjust to your specifics.

FAQ#

Does Oregon require severance pay?

No Oregon statute requires private employers to pay severance. Oregon has no mini-WARN that would mandate pay-in-lieu of notice, and the Oregon Employment Department confirms severance is at the employer's discretion unless required by an employment contract, established company policy, handbook, or collective bargaining agreement. The only layoff-notice regime that carries teeth in Oregon 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. Separately, ORS 652.140 requires that all earned and unpaid wages — including accrued vacation if the employer's policy pays out vacation — be paid by the end of the next business day after an involuntary termination, but severance itself is not "wages" for this purpose unless your contract or plan makes it so.

How is severance taxed in Oregon?

Oregon authorizes employers to withhold at a flat 8% on severance and other supplemental wages paid separately from regular wages, per the 2026 Oregon Withholding Tax Formulas (Form 150-206-436, Rev. 12-31-25). Note that Oregon's underlying income tax is graduated (4.75%, 6.75%, 8.75%, 9.9% for 2026), so if your total taxable income lands in the 8.75% or 9.9% bracket — which begins at roughly $125,000 of taxable income for single filers — the 8% withheld at payment will under-withhold and you will owe the difference on your Form OR-40. On top of OR withholding, you owe federal supplemental withholding of 22% (37% on cumulative amounts above $1,000,000 in the year) and FICA (Social Security 6.2% up to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single or $250,000 married filing jointly). Oregon has no state sales tax, but Paid Leave Oregon (0.60% employee share) and the Statewide Transit Tax (0.10%) also apply to severance.

Does Oregon have a mini-WARN?

No. Unlike California, New York, New Jersey, or Illinois, Oregon has no state-law mini-WARN. The operative regime 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 constituting at least 33% of the active workforce, or 500+ regardless of percentage) or a plant closing. Notice must go to affected employees, the Oregon Higher Education Coordinating Commission Rapid Response unit (and the Oregon Employment Department for UI coordination), and the chief elected local official. Failure to comply triggers back pay and benefits for the period notice was not given (up to 60 days), plus a $500/day civil penalty to the local government. Oregon adds no shorter notice, no lower employer-size trigger, and no statutory severance mandate.

Are non-competes enforceable in Oregon after a layoff?

Only in narrow circumstances. ORS 653.295, as overhauled by SB 169 (2021, effective for agreements entered into on or after January 1, 2022), voids any post-employment non-compete unless ALL of these conditions are met: (1) the employer gave the employee written notice at least two weeks before employment began that a non-compete would be required, OR the non-compete was entered upon a bona fide advancement of the employee; (2) the employee is a salaried exempt worker (FLSA-exempt under ORS 653.020(3)); (3) the employer has a protectable interest (trade secrets, confidential business information, or qualifying on-air talent); (4) the employee's annualized gross salary plus commissions at termination exceeds the BOLI-published, inflation-indexed threshold ($119,541 for 2026); AND (5) the employer delivers a signed written copy of the non-compete within 30 days after termination. The maximum enforceable duration is 12 months from termination. If any condition fails, the non-compete is void by statute. The statute does NOT void non-solicitation, non-disclosure, or trade-secret protection agreements — those remain enforceable under common law and the Oregon Uniform Trade Secrets Act. Practical implication for severance: if you earned less than $119,541, were non-exempt, or did not receive the 2-week pre-hire notice, the underlying non-compete is already void — any "non-compete release" your severance offer purports to give is releasing nothing real, so you can negotiate that consideration away.

What is the Oregon Workplace Fairness Act and how does it affect my severance agreement?

The Oregon Workplace Fairness Act (OWFA), ORS 659A.370 (effective October 1, 2020; amended by SB 1586 in 2022 effective January 1, 2023), restricts what an employer may include in any agreement — including a separation or severance agreement — with an employee or prospective employee when the agreement relates to conduct constituting discrimination, harassment, or sexual assault under ORS 659A.030, 659A.082, or 659A.112. Specifically, the agreement may NOT contain a nondisclosure provision, a non-disparagement provision, or a no-rehire provision that prevents the employee from disclosing or discussing the underlying conduct — UNLESS the employee voluntarily requests the inclusion of such provisions in writing. The agreement must give the employee at least 7 days to consider the agreement before signing AND at least 7 days after signing to revoke it (the agreement does not become effective until the revocation period expires). An employer that violates ORS 659A.370 faces a civil penalty of up to $5,000 per violation in addition to actual damages and attorney fees under ORS 659A.885. Practical implication: read any NDA or non-disparagement clause in your Oregon severance agreement carefully. If you have not raised a discrimination/harassment claim, broad NDA clauses are generally still permitted; if you have raised or are aware of underlying discrimination, the standard 21/7 OWBPA timeline may also apply and you can negotiate to narrow the NDA, exclude the underlying conduct, or remove the no-rehire term.

Can I collect Oregon unemployment while receiving severance?

Yes, generally. The Oregon Employment Department's claimant FAQ states that severance pay does NOT need to be reported on weekly unemployment claims, and severance is not classified as "wages" that disqualify you from weekly benefits under ORS 657.105 in the same way regular pay does. This makes Oregon notably more permissive than Minnesota (where Minn. Stat. § 268.085 subd. 3b disqualifies UI for severance-allocated weeks) and Colorado (where CDLE treats severance as wages and delays benefits). However, you still must satisfy Oregon's general UI eligibility rules: you must have lost work through no fault of your own, must be able and available for work, and must actively seek work each week. File your initial claim with the Oregon Employment Department promptly after separation — the OED weekly benefit amount for 2026 is approximately 1.25% of your base-year wages, subject to a maximum that the OED indexes annually. Note: even though severance generally doesn't reduce weekly OR UI benefits, "wages in lieu of notice" allocated by your employer to a specific post-separation period may still delay benefits for that period — the OED makes the determination based on how the payment is characterized in the separation paperwork.