Maine Severance Pay Laws (2026): When Severance Is Required

Yes, in one situation. Maine requires an employer to pay severance when it closes, relocates or conducts a mass layoff at a covered establishment, which is a facility that employs, or at any time in the previous 12 months employed, 100 or more people. Under 26 M.R.S. 625-B, eligible employees with at least 3 years of service receive one week's pay for each year worked.

Outside that situation, no Maine law requires severance. An ordinary layoff, a firing or a small reduction in force carries severance only if your employer promised it in a contract, handbook, plan or separation agreement. For how other states handle severance and the full federal rules, see our severance pay laws by state guide.

Information last verified on October 8, 2026. This article has not been reviewed by a licensed lawyer.

Jurisdiction scope: This article covers Maine's statutory severance and closing-notice law (26 M.R.S. 625-B and the Bureau of Labor Standards rule, 12-170 C.M.R. ch. 15), Maine law on promised severance (26 M.R.S. 626 and 626-A), the unemployment offset (26 M.R.S. 1193(5)) and the limits on separation-agreement terms in 26 M.R.S. 599-C, with short notes on the federal rules that apply in Maine. It does not cover when your last regular paycheck is due; see Maine final paycheck laws. It does not cover benefit amounts or how to file for unemployment; see Maine unemployment benefits.

When Maine law requires severance pay

Section 625-B(2) sets the duty in one sentence:

"Any employer who closes or engages in a mass layoff at a covered establishment is liable to eligible employees of the covered establishment for severance pay at the rate of one week's pay for each year, and partial pay for any partial year, from the last full month of employment by the employee in that establishment." (26 M.R.S. 625-B)

Two events trigger it, and each depends on the establishment being a covered establishment (100 or more people at any time in the preceding 12 months):

• Closing. A permanent shutdown of operations at the establishment, which can happen by relocation or by termination of the business. The statute separately defines a relocation as moving all or substantially all of the establishment's operations 100 or more miles away, in or out of Maine, and uses that definition for the 90-day notice duty.
• Mass layoff. An employment loss of at least 6 months for at least 33% of the employees and at least 50 employees, or for at least 500 employees.

A parent corporation counts as the indirect owner and employer of its subsidiary's establishment, and a bankruptcy filing alone does not exempt an establishment from the statute (26 M.R.S. 625-B(1), (3-A)).

The 2023 expansion beyond industrial and commercial sites

Older summaries say Maine's severance law applies only to industrial or commercial facilities. That is out of date. P.L. 2023, c. 52 (LD 12), "An Act to Amend the Laws Governing Severance Pay to Cover More Types of Employers and Include More Workers," approved May 8, 2023 and effective October 25, 2023, struck the words "industrial or commercial" from the definitions of covered establishment, closing and relocation. The current statute no longer contains that limit.

Who is eligible for Maine severance pay

Under 625-B, an eligible employee:

• was continuously employed at the covered establishment for at least 3 years at the time of the closing or mass layoff (a leave of absence does not break the period);
• was not terminated for cause; and
• has not accepted employment at another or a relocated establishment of the same employer and is not still employed at the covered establishment.

The statute also covers an employee who quit voluntarily to take a new job within 30 days before the closing or mass-layoff date given in the employer's initial notice. Leaving early for a new job in that window does not forfeit the payment.

If you were denied statutory severance because you were fired for cause, the Bureau's rule lets you appeal that disqualification to the Bureau of Labor Standards after exhausting any internal or administrative appeal. The appeal must be in writing and filed no later than 90 days after the for-cause termination or 30 days after the date of the closing or relocation, whichever is later. The Department's Division of Administrative Hearings decides whether the firing was for cause under the standard used for unemployment benefits (12-170 C.M.R. ch. 15, sec. V(B)).

When the employer owes nothing

Section 625-B(3) removes liability in three situations:

• the closing or mass layoff is necessitated by a physical calamity or by the final order of a federal, state or local government agency;
• the employee is covered by an express contract providing severance greater than the statute requires, and has actually been paid under it (the employer must show this to the Director of the Bureau of Labor Standards); or
• the employee worked for the employer for less than 3 years.

How Maine severance is calculated

The formula is one week's pay for each year of employment, plus partial pay for any partial year, measured from your last full month of employment at the establishment. A "week's pay" is your gross earnings in the 12 months before the closing or mass layoff, divided by the number of weeks in which you received gross earnings (26 M.R.S. 625-B).

Gross earnings include regular hours, shift differentials, premiums, overtime, floating holidays, holidays, funeral leave, jury duty, sick pay and vacation pay. They exclude third-party benefit payments such as disability. The Bureau of Labor Standards rule also excludes payments unrelated to hours worked or leave used, such as taxable fringe benefits like group term life insurance or a health insurance opt-out payment (12-170 C.M.R. ch. 15, Rule I(F)).

What an employer can and cannot subtract

The Bureau's rule limits how an employer can reduce the statutory amount:

"The employer may only discount the severance pay by any voluntary and unconditional payments made to the eligible employee, except that premiums or bonuses offered to encourage employees to maintain employment through the termination or relocation period may not be used to discount severance." (12-170 C.M.R. ch. 15, Rule VI(D))

So a retention bonus for staying through the closing does not count toward severance, while payments under a contract that provides for severance may be credited. The rule, effective March 18, 2024, is not fully consistent with the statute: its eligibility list says "three consecutive years under the current ownership," while its calculation section counts years worked "regardless of prior ownership" and the statute has no ownership condition. Where the rule and the statute differ, the statute's text governs.

When Maine severance must be paid

Statutory severance is due "within one regular pay period after the employee's last full day of work, notwithstanding any other provisions of law" (26 M.R.S. 625-B(2)). It is paid in addition to your final wages, which are due no later than your next established payday under 26 M.R.S. 626.

No Maine statute or Department of Labor guidance we found sets a deadline for severance that a contract or handbook promises. For that kind of severance, the payment date is whatever the agreement or policy says. For your last regular paycheck, see Maine final paycheck laws.

Maine's 90-day closing notice and how it relates to federal WARN

Maine has no separate mini-WARN act; its notice duties sit in the same section as the severance mandate (26 M.R.S. 625-B(6), (6-A)):

A mass-layoff notice must state the expected duration and whether it is definite or indefinite, and the Director may require reports at least every 30 days. The Maine Department of Labor's employee rights guide puts it this way: "If your company plans to close or move and has 100 or more workers, your employer must give you at least 90 days notice."

The penalty for violating the notice rules is a civil fine of $500 per day, which does not apply if the closing is caused by a physical calamity or a government final order, or if the notice failure is due to unforeseen circumstances (625-B(9)). Unlike the federal law, Maine's statute contains no back-pay remedy for short notice. The Bureau's rule says all 625-B notices go to the Director and that a copy of a federal WARN notice may be given, but it does not by itself satisfy 625-B (12-170 C.M.R. ch. 15, sec. IV.A).

The federal WARN Act applies on top of Maine law. It requires 60 days' written notice from employers with 100 or more employees, not counting part-time workers (or 100 or more employees, counting part-time workers, who together work at least 4,000 hours a week, not counting overtime), before a covered plant closing or mass layoff, and an employer that skips it owes back pay and benefits for up to 60 days (29 U.S.C. 2101-2104). Our severance pay laws guide covers the federal thresholds and exceptions.

How to collect Maine statutory severance

Section 625-B(4) and (5) give two routes:

• Your own lawsuit. An employee can sue in state or federal court, and the court awards reasonable attorney's fees and costs. A labor organization may sue on behalf of its members.
• The Director of the Bureau of Labor Standards. The Director may supervise payment of the severance and may sue the employer. Once the Director files suit, the employee's own right to sue ends, unless the Director dismisses that action without prejudice. Amounts the Director recovers that cannot be paid to employees within 3 years go to the State.

That second rule has teeth. In International Ass'n of Machinists v. Verso Corp., 121 F. Supp. 3d 201 (D. Me. 2015), the federal court dismissed employees' severance claims because Maine law precluded them from proceeding once the Director brought suit.

An employer that fails to pay severance also faces a civil fine of up to $1,000 per violation, with each affected employee a separate violation. The fines may not be collected to the extent that collecting them would prevent the employer from making the required severance payments (625-B(9)).

Deadline to sue

Section 625-B contains no limitations period of its own. Maine's general civil rule is that "All civil actions shall be commenced within 6 years after the cause of action accrues and not afterwards," except as otherwise specially provided (14 M.R.S. 752). We found no case applying that rule to a 625-B claim, so treat 6 years as the default rather than a confirmed deadline.

The Supreme Court upheld Maine's law

The mandate has survived a federal preemption challenge. In Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987), the U.S. Supreme Court held that Maine's statutory severance requirement, a one-time lump-sum payment on a plant closing, is not preempted by ERISA or the National Labor Relations Act, because the statute neither establishes nor requires an employer to maintain an employee benefit plan.

Severance your employer promised

If your job ended in an ordinary layoff or firing, Maine's mandate does not apply, and your right to severance depends on what your employer promised. Whether your employer could end your job at all is a separate question, covered on our Maine at-will employment page.

Is promised severance "wages" in Maine?

That question is unsettled. Maine's final-wage statute says vacation pay owed at the end of employment "has the same status as wages earned," but it has no similar sentence for severance (26 M.R.S. 626). The wage-claim remedies in 26 M.R.S. 626-A, which include liquidated damages equal to twice the unpaid wages plus fees, cover "unpaid wages and health benefits."

In Bellino v. Schlumberger Technologies, Inc., 753 F. Supp. 391 (D. Me. 1990), a federal court said it found no Maine precedent and predicted that "were a Maine court to pass on the question, it would conclude that severance pay benefits are not wages for the purposes of the statute." The same court held that contract and promissory-estoppel claims on a handbook severance plan were preempted because they related to an ERISA plan.

Bellino is a federal court's prediction, not a ruling of Maine's highest court, and it predates several amendments to 626-A. We found no Maine Law Court opinion on the question.

ERISA plans

If your severance comes from a formal company plan, federal law may control it. ERISA supersedes state laws that relate to covered employee benefit plans (29 U.S.C. 1144(a)), which is why the Bellino claims failed. A one-time payment under 625-B is different: Fort Halifax held it is not an ERISA plan.

Where to complain about unpaid severance

The Maine Department of Labor's Wage and Hour Division takes complaints about final paychecks, minimum wage, overtime and similar issues through its online complaint portal. The portal does not mention severance, and it states that the Division will "not investigate or take further action on complaints that do not state a potential violation within the Division's jurisdiction." For statutory 625-B severance, the Director of the Bureau of Labor Standards is the enforcing official; for contract severance, the usual route is a contract claim in court.

Severance and Maine unemployment benefits

Severance reduces your Maine unemployment benefits for the week it is applied to. Under 26 M.R.S. 1193(5), dismissal wages, wages in lieu of notice and terminal pay received, scheduled or being received for a week reduce that week's benefit. When the payment is smaller than your benefit, the statute says:

"If the remuneration under paragraph A is less than the benefits that would otherwise be due under this chapter, the individual is entitled to receive for that week, if otherwise eligible, benefits reduced by the amount of the remuneration, rounded to the nearest lower full dollar amount;" (26 M.R.S. 1193(5))

Maine's unemployment rule says "dismissal wages," "severance pay," "terminal pay" and wages in lieu of notice "will be applied to the week in which they are paid" (12-172 C.M.R. ch. 19, sec. 2(A)). Read on its own terms, that means a lump sum counts against the week you receive it rather than being spread across later weeks.

The same rule treats an incentive to resign, retire or accept an employer-initiated separation as terminal pay. Payments from a supplemental unemployment benefit plan and bonus payments are not counted as remuneration under 1193(5), and vacation pay is no longer listed in 1193(5) (that paragraph was repealed in 2019). For benefit amounts and filing, see Maine unemployment benefits.

What a Maine severance agreement can and cannot require

Maine limits confidentiality terms in severance agreements. Under 26 M.R.S. 599-C, an employer may not require a settlement, separation or severance agreement that:

• limits your right to report, testify or provide evidence to a federal or state agency that enforces employment or discrimination laws;
• prevents you from testifying or providing evidence in court in response to legal process; or
• prohibits you from reporting conduct to law enforcement.

A clause barring you from later disclosing factual information about an unlawful employment discrimination claim is allowed only if all four conditions are met: the agreement provides separate money for that clause beyond anything you are already owed, the clause applies to all parties to the extent the law permits, the agreement clearly states that you keep the right to report, testify or provide evidence to federal and state agencies that enforce employment or discrimination laws and to testify and provide evidence in federal and state court proceedings, and the employer keeps a copy for 6 years, accessible to the Maine Department of Labor. Confidentiality agreements that protect proprietary information and trade secrets are not affected.

The Maine Department of Labor enforces 599-C, and the Attorney General may sue for a fine or an injunction. An intentional violation is a civil violation with a fine of up to $1,000.

A release in a severance agreement also cannot take away your right to unemployment benefits. Under 26 M.R.S. 1044(1), any agreement by an individual "to waive, release or commute that individual's rights to benefits or any other rights under this chapter is void," and an employer may not "require or accept any waiver of any right hereunder by an individual in the employer's employ."

We found no Maine statute that gives you a set number of days to review a separation agreement or to revoke it after signing. That finding rests on 599-C and the index of 26 M.R.S. chapter 7, not every title of Maine law. We also found no Maine statute or Law Court opinion on whether a severance agreement can release a claim for unpaid wages.

Non-compete terms in a severance agreement

Maine treats non-competes as contrary to public policy: under 26 M.R.S. 599-A, one is enforceable only to the extent it is reasonable and no broader than necessary to protect the employer's trade secrets, confidential information or goodwill, and an employer may not require one from an employee earning at or below 400% of the federal poverty level. The statute has no separate rule for a non-compete in a severance agreement.

Federal limits that also apply

These federal rules apply in Maine; our severance pay laws guide explains each:

• Workers 40 and older. A release of federal age-discrimination claims must give you at least 21 days to consider it (45 days in a group layoff) and 7 days to revoke it after signing (29 U.S.C. 626(f)).
• Sexual harassment and assault. Under the Speak Out Act, a nondisclosure or non-disparagement clause agreed to before such a dispute arises cannot be enforced in court when the conduct is alleged to violate federal, tribal or state law (42 U.S.C. 19403).
• Labor-law rights. The NLRB's McLaren Macomb decision, 372 NLRB No. 58 (2023), bars severance agreements that require employees to broadly give up their National Labor Relations Act rights. The NLRB's General Counsel is arguing to overrule it in Valley Radiology, P.A. (10-CA-324512), an open case, so the decision remains Board law until the Board acts.

Reading a severance offer in Maine

First, check whether your separation is a 625-B event: a closing, relocation or mass layoff at a site with 100 or more people, and at least 3 years of your service. If it is, the statute sets the amount and the timing, and the Bureau's rule limits what the employer can subtract from it. If it is not, the offer is the employer's promise, so keep a copy of the handbook, plan or letter it comes from. Our severance pay laws guide has general guidance on reading and negotiating an offer.

Recent Maine changes

We scanned the titles of every bill in the 132nd Legislature's bill directory and found none that amends 625-B or 599-C. The official Laws of Maine for all three sessions of the 132nd Legislature (2025 and 2026) contain no amendment to 625-B or 599-C. We have not checked bills filed for the 133rd Legislature. Check the Legislature's statute pages before relying on the text above.

Related

• Severance pay laws by state
• Maine unemployment benefits
• Maine final paycheck laws
• Maine at-will employment laws

Disclaimer: This article provides general legal information about Maine severance pay law (26 M.R.S. 625-B and 12-170 C.M.R. ch. 15, the wage statutes in 26 M.R.S. 626 and 626-A, the unemployment rule in 26 M.R.S. 1193(5) and 26 M.R.S. 599-C) and the federal laws that apply in Maine. It is not legal advice. The information was verified on October 8, 2026. For advice about your situation, contact the Maine Department of Labor's Bureau of Labor Standards, a legal aid office or a lawyer licensed in Maine.

Last updated: October 8, 2026.

Frequently Asked Questions

Is severance pay required by law in Maine?

Only after a closing, relocation or mass layoff at a covered establishment with 100 or more people in the previous 12 months. Employees with at least 3 years of continuous service then receive one week's pay per year of employment (26 M.R.S. 625-B). Otherwise severance is owed only if your employer promised it.

How much severance does Maine law require?

One week's pay for each year of employment, plus partial pay for a partial year. A week's pay is your gross earnings in the 12 months before the closing or layoff divided by the number of weeks you had gross earnings (26 M.R.S. 625-B).

What counts as a mass layoff under Maine's severance law?

An employment loss of at least 6 months for at least 33% of the employees and at least 50 employees, or for at least 500 employees, at a covered establishment (26 M.R.S. 625-B).

When must Maine severance be paid?

Statutory severance is due within one regular pay period after your last full day of work, in addition to your final wages (26 M.R.S. 625-B(2)).

How much notice must a Maine employer give before closing?

At least 90 days' written notice to the Director of the Bureau of Labor Standards for a closing or relocation, and for a closing, to employees and municipal officers too, unless the Director waives it (26 M.R.S. 625-B(6), (6-A)).

Does a federal WARN notice satisfy Maine's notice law?

No. The Bureau of Labor Standards rule says an employer may send a copy of a federal WARN notice, but it does not by itself satisfy the 625-B notice requirement (12-170 C.M.R. ch. 15, sec. IV.A).

Can my employer subtract a retention bonus from Maine severance?

No. The Bureau's rule allows severance to be reduced only by voluntary and unconditional payments, and says bonuses offered to keep employees through the closing or relocation period may not be used to discount it (12-170 C.M.R. ch. 15, Rule VI(D)).

Does severance affect unemployment in Maine?

Yes. Severance received for a week reduces that week's benefit by the amount of the payment, rounded down to the nearest full dollar when it is less than your benefit (26 M.R.S. 1193(5)), and a lump sum is applied to the week in which it is paid (12-172 C.M.R. ch. 19).

Is severance considered wages in Maine?

It is unsettled. A 1990 federal court predicted in Bellino v. Schlumberger that Maine courts would not treat severance as wages under 26 M.R.S. 626-A, but we found no Maine Law Court decision on the question.

Can a Maine severance agreement stop me from talking to a government agency?

No. Under 26 M.R.S. 599-C, an employer may not require a severance agreement that limits your right to report, testify or provide evidence to a federal or state agency that enforces employment or discrimination laws or to report conduct to law enforcement.