Washington Severance — No State Tax, WA Mini-WARN, 2026

Washington WARN: what applies#

Washington has both a state mini-WARN Act (effective July 27, 2025, SB 5525) and federal WARN. The state Act applies to employers with 50 or more full-time employees in Washington and requires 60 days advance written notice before any mass layoff or business closing affecting 50 or more employees in a 30-day period. Unlike federal WARN there is no percentage-of-workforce threshold. Notice must go to the affected employees (or their bargaining representative) and the Washington Employment Security Department. Penalties for non-compliance include up to 60 days back pay and benefits per affected employee, daily civil penalties up to $500 payable to ESD, and attorneys' fees.

How severance is taxed in Washington#

Washington has no state income tax. Your severance is subject only to federal supplemental withholding (22%, or 37% on amounts above $1,000,000 cumulative for the year) and FICA. Note: WA Cares (a 0.58% long-term care premium) applies to wages but not to severance paid after separation.

FAQ#

Does Washington have a mini-WARN Act?

Yes, as of July 27, 2025. Washington's "Securing Timely Notification and Benefits for Laid-Off Employees Act" (SB 5525) covers employers with 50 or more full-time employees and requires 60 days advance written notice for any mass layoff or business closing affecting 50 or more employees in a 30-day period. Unlike federal WARN it has no percentage-of-workforce threshold, so smaller cuts at large employers can trigger it. Penalties include up to 60 days back pay per affected employee, $500/day civil penalties payable to the Washington Employment Security Department, and attorneys' fees.

How is severance taxed in Washington?

Washington has no state income tax, so only federal taxes apply: 22% federal supplemental withholding (37% above $1,000,000 cumulative for the year), plus FICA. WA Cares (the 0.58% long-term care premium) applies to wages earned during employment but generally not to severance paid after separation — confirm with your employer's payroll.

Does Washington Paid Family and Medical Leave (PFML) apply to severance?

PFML premiums are deducted from regular wages, not from severance pay. Notably, Washington's mini-WARN Act prohibits including employees who are on PFML leave in a mass layoff. Receiving severance does not affect your ongoing PFML benefit eligibility, though state rules treat severance as wages for some purposes — check with the Washington Employment Security Department.

Does Washington unemployment treat severance as income?

Severance paid as a lump sum generally does not delay Washington unemployment benefits. Severance paid as "wages in lieu of notice" may delay benefits dollar-for-dollar during the notice period. Apply when you separate and disclose the severance details.

When did Washington Mini-WARN take effect and what does it cover?

Washington Mini-WARN was enacted as SB 5525 in 2025 and took effect on July 27, 2025. It applies to private employers with 50 or more employees in Washington (excluding part-time), and requires 60 days advance written notice to affected employees, the Washington Employment Security Department, and local elected officials before a mass layoff (50+ affected, excluding part-time, in any 30-day period) or business closing. The 50-employee employer-size threshold is materially lower than federal WARN's 100-employee floor, but the 50-affected-employee trigger and 60-day notice window mirror federal WARN — so for events with overlapping scope, meeting one generally meets the other.

Does Washington Paid Family and Medical Leave (PFML) interact with severance?

PFML premiums (0.74% of wages, split between employee and employer) are deducted from regular wages during employment. Severance paid after separation generally is not subject to PFML premiums. Eligibility for PFML benefits is based on hours worked in the qualifying period (820 hours in the four most recent completed calendar quarters); receiving severance does not reduce that eligibility. File a PFML claim directly with the Washington Employment Security Department if you need leave benefits after layoff.

Are non-competes enforceable in Washington after a layoff?

Only in narrow circumstances. Washington RCW 49.62 (effective January 1, 2020) renders most post-employment non-competes unenforceable unless the worker's earnings exceed an annually indexed threshold ($123,394 for employees and $308,485 for independent contractors in 2024, adjusted annually for inflation). The statute also voids non-competes against any employee laid off unless the employer pays compensation equivalent to base pay (minus other earnings) during the restriction period. Customer non-solicitation and trade-secret protections under RCW 19.108 are not affected. Confirm the current earnings threshold with the Washington Department of Labor & Industries before relying on the rule.