Wisconsin Severance — Mini-WARN, Top 7.65% Tax, Strict Non-Competes, 2026

Wisconsin WARN: what applies#

Wisconsin has a state mini-WARN — the Wisconsin Business Closing and Mass Layoff Law, Wis. Stat. § 109.07. The statute applies to employers employing 50 or more persons in Wisconsin and requires written notice no later than 60 days prior to the date on which a business closing or mass layoff takes place. A 'business closing' affects 25 or more employees (excluding new or low-hour employees). A 'mass layoff' is defined as employment loss of (a) at least 25 percent of the employer's workforce OR 25 employees, whichever is greater, OR (b) at least 500 employees. Notice goes to affected employees, any collective-bargaining representative, the local elected official, and the Wisconsin Department of Workforce Development (DWD) Bureau of Workforce Training Dislocated Worker Unit. Wisconsin's threshold (50+ employees, 25+ affected) is markedly more aggressive than federal WARN's 100-FTE / 50-affected trigger — Wisconsin mini-WARN's primary added obligation captures mid-size employers (50–99) too small for federal WARN, and the 'whichever is greater' language captures workforce reductions constituting 25% of a small employer's workforce even if absolute numbers are below 50. DWD enforces under § 109.09 and may seek civil penalties. Federal WARN (29 U.S.C. §§ 2101–2109) also applies in Wisconsin for employers of 100+ FTE with the federal triggers; employers covered by both must comply with the more stringent obligation.

How severance is taxed in Wisconsin#

Wisconsin's individual income tax operates under Wis. Stat. § 71.06 with a four-bracket graduated structure. The 2025 brackets are 3.50% on Wisconsin taxable income up to $14,680 single, 4.40% on the next bracket, 5.30% on the next bracket, and 7.65% on Wisconsin taxable income above $323,290 single (thresholds doubled for MFJ; inflation-indexed annually). The 2026 brackets remain at 3.50% / 4.40% / 5.30% / 7.65% with inflation-adjusted thresholds (verify against the live 2026 Publication W-166 Withholding Tax Guide). Wisconsin's middle brackets (3.50% and 4.40%) have been reduced through several biennial budget packages — for example, the middle bracket dropped from 5.84% to 5.30% via 2023 Wis. Act 19 (signed by Governor Evers July 5, 2023). Wisconsin does NOT publish a separate flat supplemental withholding rate; Publication W-166 directs employers to apply the graduated tables (wage bracket method or percentage method) to all wages including supplemental wages, producing an effective ~7.65% rate for top-bracket severance-recipient earners. Wisconsin does not impose any state-level local income tax on wages. On top of Wisconsin 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).

Calculate your situation#

Inputs default to Wisconsin; adjust to your specifics.

FAQ#

Does Wisconsin require severance pay?

No Wisconsin statute generally requires private employers to pay severance. Wisconsin mini-WARN (Wis. Stat. § 109.07) is a NOTICE statute, not a severance mandate — it requires 60 days advance notice (or pay-in-lieu if notice is not given) at employers of 50+ for business closings and mass layoffs, but does not require employers to pay severance. Severance is therefore employer-discretionary in Wisconsin unless your employment agreement, written severance plan, or company handbook makes it mandatory. Wisconsin is an at-will employment state.

How is severance taxed in Wisconsin?

Wisconsin's individual income tax operates under Wis. Stat. § 71.06 with a four-bracket graduated structure: 3.50% / 4.40% / 5.30% / 7.65% for 2026 (top bracket on Wisconsin taxable income above ~$323,290 single; thresholds inflation-indexed). The middle brackets have been reduced through biennial budget packages — for example, the third bracket dropped from 5.84% to 5.30% via 2023 Wis. Act 19 (signed July 5, 2023). Severance-recipient earners commonly fall in the top 7.65% bracket. Wisconsin does NOT publish a separate flat supplemental withholding rate; Publication W-166 directs employers to apply the graduated tables to all wages including supplemental wages, producing an effective ~7.65% rate for top-bracket earners. Wisconsin does not impose any state-level local income tax on wages. On top of Wisconsin 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 Wisconsin liability is reconciled on Form 1.

Does Wisconsin have a mini-WARN statute?

Yes — Wisconsin's mini-WARN is one of the most distinctive features for severance valuation. The Wisconsin Business Closing and Mass Layoff Law (Wis. Stat. § 109.07) applies to employers with 50 or more persons in Wisconsin and requires 60 days advance written notice to affected employees, bargaining representative, local elected official, and Wisconsin DWD Dislocated Worker Unit. A 'business closing' affects 25+ employees, excluding new or low-hour employees. A 'mass layoff' is employment loss of (a) at least 25 percent of the employer's workforce OR 25 employees, whichever is greater, OR (b) at least 500 employees. Wisconsin's 50-employee / 25-affected threshold is markedly more aggressive than federal WARN's 100-FTE / 50-affected trigger — Wisconsin mini-WARN's primary added obligation captures mid-size employers (50–99) too small for federal WARN, and the 'whichever is greater' language captures workforce reductions constituting 25% of a small employer's workforce even if absolute numbers are below 50. DWD enforces under § 109.09 and may seek civil penalties. Employers covered by both federal WARN (100+ FTE) and Wisconsin mini-WARN (50+) must comply with the more stringent notice obligation.

Does OWBPA apply in Wisconsin?

Yes. OWBPA is federal (29 U.S.C. § 626(f)) and applies in all states. If you are age 40 or older and your Wisconsin 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 Wisconsin Fair Employment Act (Wis. Stat. § 111.31 et seq.) separately prohibits age discrimination (40+) by employers with 1 or more employees — a substantially lower threshold than the federal ADEA's 20-employee minimum, so virtually all Wisconsin employers are covered by state law. A release of state-law age claims under WFEA does not require OWBPA-compliant 21/45/7 procedures, but the federal ADEA release portion still does.

Can I collect Wisconsin unemployment while receiving severance?

It depends on how the severance is structured. Wisconsin's unemployment severance treatment lives at Wis. Stat. § 108.05(7). In practice, the Wisconsin Department of Workforce Development (DWD) Unemployment Insurance Division 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 Wisconsin UI claim with DWD on or shortly after your last day worked at my.unemployment.wisconsin.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) Wisconsin's UI maximum weekly benefit amount is $370 for 2026 — verify the live figure at dwd.wisconsin.gov before relying on net-of-benefits figures.

Are non-competes enforceable in Wisconsin after a layoff?

Often NO if overbroad — Wisconsin is one of the most employee-friendly states for non-competes by judicial doctrine because of its STRICT-CONSTRUCTION rule. Wisconsin non-compete law is statutory under Wis. Stat. § 103.465, which provides that a covenant by an employee or agent not to compete with the employer 'within a specified territory and during a specified time' is lawful and enforceable only if 'reasonably necessary for the protection of the employer or principal.' Critically, Wisconsin's § 103.465 is strict-construction: a covenant that imposes an unreasonable restraint is NOT subject to judicial blue-pencil — if any portion is unreasonable, the ENTIRE covenant is unenforceable. Wisconsin courts cannot rewrite an overbroad covenant; they must reject it in its entirety. Leading cases: Star Direct, Inc. v. Dal Pra, 2009 WI 76, 319 Wis. 2d 274, 767 N.W.2d 898; Selmer Co. v. Rinn, 2010 WI App 106; and earlier Streiff v. American Family Mutual Ins. Co., 118 Wis. 2d 602, 348 N.W.2d 505 (1984). Practical takeaway: in Wisconsin, an overbroad non-compete is UNENFORCEABLE in its entirety — there is no save-the-baby blue-pencil. The non-compete release clause in your severance offer may release a non-compete that was already unenforceable in its broad form. Have an attorney review the specific covenant against § 103.465 and Star Direct before assigning value to the release.

How does Wisconsin's strict-construction non-compete rule actually work?

Wisconsin's § 103.465 strict-construction rule, articulated in Star Direct, Inc. v. Dal Pra, 2009 WI 76, distinguishes Wisconsin from most other states. In Florida, Texas, Massachusetts, or Tennessee, an overbroad non-compete is typically narrowed by a court using 'blue-pencil' or 'reasonable alteration' authority to limit it to enforceable scope. In Wisconsin, by contrast, if ANY portion of the covenant is unreasonable, the ENTIRE covenant fails — there is no judicial narrowing. The Wisconsin Supreme Court in Star Direct held that a covenant tied to multiple unreasonable restrictions cannot be saved by carving out the unreasonable portions, and that the strict-construction rule is grounded in the statutory text of § 103.465. Practical implication for severance valuation: an employer in Wisconsin offering a 'non-compete release' may be offering a release of a covenant that was already unenforceable from inception — particularly if the covenant has any overbroad provision (territory, time, scope of restricted activity, or category of restricted employer). For employees: don't assume an existing non-compete is enforceable, and don't credit the 'release' as a major employer concession in negotiation. For employers: ensure the covenant is narrowly drafted from inception — a broadly drafted Wisconsin non-compete is often an own-goal because it fails entirely. Have an attorney review § 103.465 and Star Direct application to your specific covenant before assigning value.