Does Vermont require severance pay?

No Vermont statute generally requires private employers to pay severance — and Vermont's Notice of Potential Layoffs Act (21 V.S.A. §§ 411–414) is a notice statute, not a severance mandate. Section 413 does require employers triggering the Act to 'pay all unpaid wage and compensation owed to any laid-off worker,' but that is the standard final-wages obligation (already covered by Vermont's wage-payment statutes), not statutory severance beyond what employees have already earned. Severance is employer-discretionary in Vermont unless your employment agreement, handbook, or collective bargaining agreement makes it mandatory.

How is severance taxed in Vermont?

Vermont income tax is graduated under 32 V.S.A. § 5822 with four brackets: 3.35% (lowest), 6.6%, 7.6%, and 8.75% top marginal rate. The 2026 top-bracket threshold is approximately $195,450 single / $237,950 MFJ / $216,700 head of household / $118,975 married filing separately, indexed annually for inflation. Vermont does NOT publish a separate flat supplemental withholding rate; the Vermont Department of Taxes' GB-1210 Withholding Tax Guide directs employers to withhold against the graduated brackets, which for severance-recipient earners typically reach the 8.75% top marginal rate (one of the higher state rates in the country). Vermont also has a unique ALTERNATIVE-MINIMUM-STYLE provision in 32 V.S.A. § 5822: if your federal adjusted gross income exceeds $150,000, your Vermont tax is the GREATER of (a) the calculated graduated tax or (b) 3% of federal AGI — meaning a high-earner severance recipient could find their effective Vermont rate floored at 3% of federal AGI even if their Vermont taxable income (after itemized deductions, etc.) suggests a lower bill. Plus the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 for the year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% on all wages, plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). State tax is reconciled on your Vermont Form IN-111.

Does OWBPA apply in Vermont?

Yes. OWBPA is federal (29 U.S.C. § 626(f)) and applies in all states. If you are age 40 or older and your Vermont 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. Vermont's Fair Employment Practices Act (21 V.S.A. § 495) separately prohibits age discrimination by ALL employers in Vermont with at least one employee — a far broader threshold than the federal ADEA's 20-employee minimum or even Title VII's 15-employee minimum. A release of state-law age claims under § 495 does not require OWBPA-compliant 21/45/7 procedures, but the federal ADEA release portion still does.

Can I collect Vermont unemployment while receiving severance? (21 V.S.A. § 1344)

Vermont UI EXPLICITLY offsets severance pay — this is one of Vermont's clearer statutory rules. 21 V.S.A. § 1344(a)(5)(C) provides that 'severance pay, back pay awards, and back pay settlements' are subject to disqualification allocation rules: the amount and timing of the offset depend on how the severance is allocated, either per the employment agreement (e.g., as wages in lieu of notice for a specific period) or, in the absence of specificity, 'as the Commissioner deems reasonable.' The practical effect: a Vermont severance recipient who files for UI cannot collect benefits during the weeks to which the severance is allocated — the offset typically reduces the weekly benefit dollar-for-dollar to zero during the allocated weeks. Severance does NOT permanently disqualify you; once exhausted under the allocation, UI eligibility resumes (subject to other qualifying requirements). Practical takeaways: (a) file your VT UI claim with the Vermont Department of Labor on or shortly after your last day worked at labor.vermont.gov 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 VT UI maximum weekly benefit amount with VTDOL before relying on net-of-benefits figures.

Are non-competes enforceable in Vermont after a layoff?

Often yes if reasonable — Vermont has NO general statutory restriction on non-competes (unlike California's near-total ban, Maine's wage-threshold rule, or Rhode Island's § 28-59 protections). Vermont non-compete law is entirely common-law: covenants must be reasonable in time, geography, and scope of restricted activities, ancillary to a legitimate business interest (trade secrets, confidential information, substantial customer relationships, goodwill), and must not impose undue hardship on the employee or harm the public. Vermont courts have generally been suspicious of overbroad covenants in the absence of statutory guidance — see Roy's Orthopedic v. Lavigne, 145 Vt. 324 (1985), and subsequent Vermont Supreme Court decisions. Sector-specific limits exist: 18 V.S.A. § 4111 restricts non-competes against primary care physicians. Practical takeaway: in Vermont, the non-compete release clause in your severance offer can have real value (no statutory bar for ordinary workers), and a covenant reasonable in time and scope can be enforced — but Vermont courts may pare back overbroad terms. Have an attorney review duration, geography, and scope before signing.

Does Vermont have a state paid family leave program?

Not yet. Vermont has NO statewide mandatory paid family and medical leave program — H.66 (2023–2024 session) would have created one but did not become law. Vermont employers and employees rely on federal FMLA (12 weeks unpaid, employers of 50+), Vermont's Parental and Family Leave Act (21 V.S.A. § 472, which provides unpaid leave through smaller Vermont employers), and any employer-provided STD/LTD or paid leave benefits. Unlike Connecticut, Rhode Island, Delaware, or Maryland, Vermont does NOT automatically deduct paid-leave premiums from your paycheck during active employment, and there is no statewide VT PFL benefit you can stack against severance. Confirm current state of Vermont PFL legislation at legislature.vermont.gov before relying on this for severance-package planning.

Vermont Severance — § 411 Mini-WARN, 8.75% Top Rate, 2026

Q: Does Vermont have a mini-WARN statute?

Yes. Vermont's mini-WARN is the Notice of Potential Layoffs Act, 21 V.S.A. §§ 411–414, added by 2013 Act No. 125, effective January 15, 2015. Section 411 defines 'business closing' as the permanent shutdown of a facility or operations affecting 50+ employees over 90 days, and 'mass layoff' as a permanent employment loss of at least 50 employees at one or more Vermont worksites in any 90-day period. The Act applies to employers with 50+ full-time employees, 50+ part-time employees working 1,040+ hours annually, or a combination totaling 50+. Section 413 requires 45 DAYS' advance notice to the Vermont Secretary of Commerce and Community Development and the Commissioner of Labor BEFORE implementing a closing or mass layoff, PLUS 30 DAYS' notice to affected employees, the local chief elected official, and any bargaining agent. The notice must include the approximate number and job titles of affected employees, the anticipated date of the employment loss, and the affected worksites. Employers must also pay all unpaid wage and compensation owed to any laid-off worker. Larger employers covered by both regimes follow the federal-WARN 60-day employee-facing notice and add the Vermont state-agency disclosure obligations.

By Severance Calculator Editorial · Updated May 13, 2026

Vermont WARN: what applies

Vermont has a state mini-WARN — the Notice of Potential Layoffs Act, 21 V.S.A. §§ 411–414, added by 2013 Act No. 125, effective January 15, 2015. Section 411 defines "business closing" as the permanent shutdown of a facility or operations affecting 50+ employees over 90 days, and "mass layoff" as a permanent employment loss of at least 50 employees at one or more worksites in Vermont during any 90-day period. The Act applies to employers with 50+ full-time employees, 50+ part-time employees working 1,040+ hours annually, or a combination totaling 50+. Section 413 requires 45 DAYS' advance notice to the Vermont Secretary of Commerce and Community Development and the Commissioner of Labor BEFORE implementing a closing or mass layoff, plus 30 DAYS' notice to affected employees, the local chief elected official, and any bargaining agent. Notice must include the approximate number and job titles of affected employees, the anticipated date of the employment loss, and the affected worksites. Employers must also pay all unpaid wage and compensation owed to any laid-off worker.

How severance is taxed in Vermont

Vermont income tax is graduated under 32 V.S.A. § 5822 with four brackets — 3.35% (lowest), 6.6%, 7.6%, and 8.75% top marginal rate. The 2026 top-bracket threshold is approximately $195,450 single / $237,950 MFJ / $216,700 head of household / $118,975 married filing separately (indexed annually for inflation). Vermont's 8.75% top is one of the higher state rates in the country. Vermont does NOT publish a separate flat supplemental withholding rate; the Vermont Department of Taxes' GB-1210 Withholding Tax Guide directs employers to withhold against the graduated brackets, which for severance-recipient earners typically reach the 8.75% top marginal rate. Vermont also has a UNIQUE alternative-minimum-style floor under 32 V.S.A. § 5822: taxpayers with federal adjusted gross income exceeding $150,000 must pay whichever is GREATER of (a) the calculated graduated tax or (b) 3% of federal AGI. Plus the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 for the year) and FICA.

Calculate your situation

Inputs default to Vermont; adjust to your specifics.

Your situation

Role level

Years of tenure

Base salary ($)

State of employment

Age

Filing status

Variable comp ($ / yr)

Unvested RSU value ($)

Monthly medical premium (employer-side, $)

This is part of a group layoff

Severance benchmarks

Typical benchmark

$21,635

7.5 weeks · methodology: benchmarks are derived from publicly reported severance norms across us corporate layoffs. weeks/year scale with role level; tenure <1 year gets a floor; cap at 52 weeks. these are negotiation reference points, not promises.

Band	Weeks	Gross
Typical	7.5	$21,635
Good	12.5	$36,058
Aggressive	20.0	$57,692

Tax breakdown (typical band)

Gross	$21,635
Federal supplemental	−$4,760
State supplemental	−$1,893
FICA — Social Security	−$1,341
FICA — Medicare	−$314
FICA — Additional Medicare	−$0
Net cash	$13,327

WARN Act

Not a group layoff

OWBPA review window

Individual exit (21-day review window) under the Older Workers Benefit Protection Act, plus 7-day revocation right.

Review window: 21 days · Revocation: 7 days after signing

COBRA cost

Monthly: $0

Annual: $0

Enter your employer-side monthly premium for an estimate.

Equity at termination

Forfeited unvested: $0

ISO exercise window post-termination: 90 days

ISO holders: you typically have 90 days post-termination to exercise vested ISOs before they convert to NSOs.

FAQ

Does Vermont require severance pay?: No Vermont statute generally requires private employers to pay severance — and Vermont's Notice of Potential Layoffs Act (21 V.S.A. §§ 411–414) is a notice statute, not a severance mandate. Section 413 does require employers triggering the Act to 'pay all unpaid wage and compensation owed to any laid-off worker,' but that is the standard final-wages obligation (already covered by Vermont's wage-payment statutes), not statutory severance beyond what employees have already earned. Severance is employer-discretionary in Vermont unless your employment agreement, handbook, or collective bargaining agreement makes it mandatory.
How is severance taxed in Vermont?: Vermont income tax is graduated under 32 V.S.A. § 5822 with four brackets: 3.35% (lowest), 6.6%, 7.6%, and 8.75% top marginal rate. The 2026 top-bracket threshold is approximately $195,450 single / $237,950 MFJ / $216,700 head of household / $118,975 married filing separately, indexed annually for inflation. Vermont does NOT publish a separate flat supplemental withholding rate; the Vermont Department of Taxes' GB-1210 Withholding Tax Guide directs employers to withhold against the graduated brackets, which for severance-recipient earners typically reach the 8.75% top marginal rate (one of the higher state rates in the country). Vermont also has a unique ALTERNATIVE-MINIMUM-STYLE provision in 32 V.S.A. § 5822: if your federal adjusted gross income exceeds $150,000, your Vermont tax is the GREATER of (a) the calculated graduated tax or (b) 3% of federal AGI — meaning a high-earner severance recipient could find their effective Vermont rate floored at 3% of federal AGI even if their Vermont taxable income (after itemized deductions, etc.) suggests a lower bill. Plus the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 for the year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% on all wages, plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). State tax is reconciled on your Vermont Form IN-111.
Does Vermont have a mini-WARN statute?: Yes. Vermont's mini-WARN is the Notice of Potential Layoffs Act, 21 V.S.A. §§ 411–414, added by 2013 Act No. 125, effective January 15, 2015. Section 411 defines 'business closing' as the permanent shutdown of a facility or operations affecting 50+ employees over 90 days, and 'mass layoff' as a permanent employment loss of at least 50 employees at one or more Vermont worksites in any 90-day period. The Act applies to employers with 50+ full-time employees, 50+ part-time employees working 1,040+ hours annually, or a combination totaling 50+. Section 413 requires 45 DAYS' advance notice to the Vermont Secretary of Commerce and Community Development and the Commissioner of Labor BEFORE implementing a closing or mass layoff, PLUS 30 DAYS' notice to affected employees, the local chief elected official, and any bargaining agent. The notice must include the approximate number and job titles of affected employees, the anticipated date of the employment loss, and the affected worksites. Employers must also pay all unpaid wage and compensation owed to any laid-off worker. Larger employers covered by both regimes follow the federal-WARN 60-day employee-facing notice and add the Vermont state-agency disclosure obligations.
Does OWBPA apply in Vermont?: Yes. OWBPA is federal (29 U.S.C. § 626(f)) and applies in all states. If you are age 40 or older and your Vermont 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. Vermont's Fair Employment Practices Act (21 V.S.A. § 495) separately prohibits age discrimination by ALL employers in Vermont with at least one employee — a far broader threshold than the federal ADEA's 20-employee minimum or even Title VII's 15-employee minimum. A release of state-law age claims under § 495 does not require OWBPA-compliant 21/45/7 procedures, but the federal ADEA release portion still does.
Can I collect Vermont unemployment while receiving severance? (21 V.S.A. § 1344): Vermont UI EXPLICITLY offsets severance pay — this is one of Vermont's clearer statutory rules. 21 V.S.A. § 1344(a)(5)(C) provides that 'severance pay, back pay awards, and back pay settlements' are subject to disqualification allocation rules: the amount and timing of the offset depend on how the severance is allocated, either per the employment agreement (e.g., as wages in lieu of notice for a specific period) or, in the absence of specificity, 'as the Commissioner deems reasonable.' The practical effect: a Vermont severance recipient who files for UI cannot collect benefits during the weeks to which the severance is allocated — the offset typically reduces the weekly benefit dollar-for-dollar to zero during the allocated weeks. Severance does NOT permanently disqualify you; once exhausted under the allocation, UI eligibility resumes (subject to other qualifying requirements). Practical takeaways: (a) file your VT UI claim with the Vermont Department of Labor on or shortly after your last day worked at labor.vermont.gov 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 VT UI maximum weekly benefit amount with VTDOL before relying on net-of-benefits figures.
Are non-competes enforceable in Vermont after a layoff?: Often yes if reasonable — Vermont has NO general statutory restriction on non-competes (unlike California's near-total ban, Maine's wage-threshold rule, or Rhode Island's § 28-59 protections). Vermont non-compete law is entirely common-law: covenants must be reasonable in time, geography, and scope of restricted activities, ancillary to a legitimate business interest (trade secrets, confidential information, substantial customer relationships, goodwill), and must not impose undue hardship on the employee or harm the public. Vermont courts have generally been suspicious of overbroad covenants in the absence of statutory guidance — see Roy's Orthopedic v. Lavigne, 145 Vt. 324 (1985), and subsequent Vermont Supreme Court decisions. Sector-specific limits exist: 18 V.S.A. § 4111 restricts non-competes against primary care physicians. Practical takeaway: in Vermont, the non-compete release clause in your severance offer can have real value (no statutory bar for ordinary workers), and a covenant reasonable in time and scope can be enforced — but Vermont courts may pare back overbroad terms. Have an attorney review duration, geography, and scope before signing.
Does Vermont have a state paid family leave program?: Not yet. Vermont has NO statewide mandatory paid family and medical leave program — H.66 (2023–2024 session) would have created one but did not become law. Vermont employers and employees rely on federal FMLA (12 weeks unpaid, employers of 50+), Vermont's Parental and Family Leave Act (21 V.S.A. § 472, which provides unpaid leave through smaller Vermont employers), and any employer-provided STD/LTD or paid leave benefits. Unlike Connecticut, Rhode Island, Delaware, or Maryland, Vermont does NOT automatically deduct paid-leave premiums from your paycheck during active employment, and there is no statewide VT PFL benefit you can stack against severance. Confirm current state of Vermont PFL legislation at legislature.vermont.gov before relying on this for severance-package planning.