Maryland Severance Pay Laws (2026): Is Severance Required?

No Maryland law requires an employer to pay severance. The closest Maryland comes is the Economic Stabilization Act, its mini-WARN law, which requires employers with 50 or more employees to give 60 days' written notice before a covered layoff or closing (Md. Code, Lab. & Empl. 11-305). Its regulation says employers "should consider" offering severance, which creates no payment duty. Where Maryland law does matter is promised severance: the Wage Payment and Collection Law counts "any other remuneration promised for service" as wages (3-501(c)), and a court has held that severance earned through your service can be collected under it.

For how other states handle severance and the federal rules in full, 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 Maryland law on severance: the Economic Stabilization Act (Lab. & Empl. 11-301 to 11-306) and its regulations at COMAR 09.33.02, the Wage Payment and Collection Law (Lab. & Empl. 3-501, 3-505, 3-507.1 and 3-507.2), the unemployment rule in Lab. & Empl. 8-1009 and COMAR 09.32.02.12, and Lab. & Empl. 3-715, with short notes on the federal rules that apply in Maryland. It does not cover when your last regular paycheck is due; see Maryland final paycheck laws. It does not cover benefit amounts or how to file for unemployment; see Maryland unemployment benefits.

Is severance pay required in Maryland?

No. We read the Maryland wage payment sections (Lab. & Empl. 3-501, 3-505, 3-507.1 and 3-507.2), sections 3-715 and 3-716, the full Economic Stabilization Act (11-301 to 11-306), and the Economic Stabilization and unemployment regulations at COMAR 09.33.02 and 09.32.02.12. None of them requires an employer to pay severance.

That finding rests on the sections we opened. The Maryland General Assembly's website offered no usable full-text search of the whole Annotated Code, so this is not a search of every Maryland statute. We also scanned the titles of 2025 and 2026 House and Senate bills and found no bill that would require severance (see the last section).

Federal law does not fill the gap. The U.S. Department of Labor says the Fair Labor Standards Act does not require severance pay and that severance is a matter of agreement between employer and employee. Whether your employer could end your job at all is a separate question; see Maryland at-will employment laws.

What Maryland's layoff guidelines say about severance

The word "severance" does appear in Maryland law, but only as a recommendation. Section 11-304 lists among the subjects of the state's reduction-in-operations guidelines "the continuation of benefits, such as health, severance, and pension, that an employer should provide to employees who will be terminated due to a reduction in operations." Section 11-304 calls these "mandatory guidelines," but the severance item in them says only that employers "should consider" a severance package, so it creates no payment duty.

The regulation puts it this way (COMAR 09.33.02.05(D)(1)(b)):

"Employers should consider providing the following special benefits: ... (b) A severance pay package tied to the employee's wage level or length of employment, or both;"

The same regulation says employers "should consider" offering health coverage, or the option to continue it at the employee's own expense, for at least 6 months or until the employee finds other work (COMAR 09.33.02.05(C)(2)(a)). The penalty section of the Act, 11-306, attaches to the 60-day notice duty in 11-305, not to these guidelines. A layoff without severance does not violate them.

Maryland's 60-day layoff notice law (Economic Stabilization Act)

Maryland's mini-WARN law is the Economic Stabilization Act. Its core rule is in 11-305:

"an employer shall provide written notice at least 60 days before initiating a reduction in operations"

According to the Maryland Department of Labor, Senate Bill 780 (Chapter 407) of the 2020 session amended the Act to require this 60-day notice.

Who is covered and what triggers notice

Who gets notice and what it must say

The written notice goes to all affected employees, each exclusive bargaining representative, part-time and short-tenure workers at the workplace, the Division's dislocated worker unit, and the chief elected official of the local government (11-305). It must give the workplace's name and address, a contact name, phone number and email, whether the reduction is permanent or temporary and whether the workplace is expected to shut down, and the expected start date.

Notice can come later only if the employer was actively seeking capital or business and believed notice would prevent it from getting it, or if a natural disaster caused the reduction. The employer must then give notice as soon as practicable with a brief statement of the reason (11-305(c)). When a business is sold, the seller gives notice for the period up to the sale and the buyer for the period after it (11-305(d)).

What happens if an employer skips notice

The Secretary of Labor must issue an order compelling compliance and may assess a civil penalty of up to $10,000 for each day of violation, considering the gravity of the violation, the employer's size, its good faith and its history (11-306). The penalty runs through the State's administrative notice-and-hearing process.

That is the whole remedy. Unlike federal WARN, the Maryland Act contains no back-pay award for employees and no employee lawsuit in 11-301 to 11-306. Notices and questions go to the Maryland Department of Labor's Dislocation Services Unit in the Division of Workforce Development and Adult Learning.

Federal WARN also applies in Maryland. It requires 60 days' notice from employers with 100 or more employees, not counting part-time employees, or with 100 or more employees, counting part-time employees, who together work at least 4,000 hours a week, not counting overtime, and an employer that skips it owes affected employees back pay and benefits for up to 60 days, enforced by a suit in federal court (29 U.S.C. 2101-2104). Because the Maryland Act starts at 50 employees, some Maryland layoffs trigger only the state notice. Our severance pay laws guide covers the federal rules.

Promised severance under the Wage Payment and Collection Law

If your employer promised severance in a contract, offer letter, policy or handbook, Maryland's wage law may let you collect it. Section 3-501(c) defines "wage" as all compensation due to an employee for employment, including a bonus, commission, fringe benefit, overtime wages, "or any other remuneration promised for service."

What the courts have said

In Stevenson v. Branch Banking & Trust Corp., No. 802, Sept. Term 2003 (Md. Ct. Spec. App. Nov. 17, 2004), the court drew a line between two kinds of severance. Severance that is deferred compensation for work already performed, such as severance based on length or nature of employment, can be wages under the Act. Severance that pays for a promise not to compete, as the "Termination Compensation" in that case did, is not. The court wrote that "non-payment of severance pay representing deferred compensation for services performed during the employment may be grounds for relief under the Act."

Stevenson was decided in 2004 under the statute as it read then. Whether a particular severance plan, or a payment conditioned on signing a release, counts as wages depends on its terms, and we did not find a Maryland decision addressing release-conditioned severance.

Himes Associates, Ltd. v. Anderson, No. 310, Sept. Term 2007 (Md. Ct. Spec. App. Feb. 29, 2008), shows what such a claim can produce. The court affirmed a judgment under the Act for an executive whose employer fired him and refused to pay his contractual three months' severance; the trial court had awarded treble damages of $98,521 plus $7,974.49 in attorney's fees and costs. The appeal turned on other issues, so the case is an example of a recovery rather than the authority for treating severance as wages.

Severance from a company plan

If your severance comes from a formal employer plan, federal law may control instead. ERISA supersedes state laws that relate to covered employee benefit plans (29 U.S.C. 1144(a)), and the U.S. Department of Labor says its Employee Benefits Security Administration may help an employee who did not receive severance under an employer-sponsored plan.

When severance must be paid in Maryland

Maryland law sets a deadline for final wages but not, in terms, for severance. Under 3-505(a), wages due for work performed before termination must be paid "on or before the day on which the employee would have been paid the wages if the employment had not been terminated," that is, by the next regular payday.

Neither 3-505 nor the Division of Labor and Industry's wage page mentions severance by name. Stevenson, however, said severance that is deferred pay for your service, such as severance based on length of employment, is wages "that must be paid in accordance with the time requirements in LE § 3-505," meaning by the next regular payday, and the Act's remedy runs from that date. Severance that is not wages under Stevenson is due when the agreement or policy says. For your last regular paycheck, see Maryland final paycheck laws.

How to claim unpaid severance in Maryland

The Wage Payment and Collection Law gives two routes for unpaid wages:

• A lawsuit. If wages are not paid within 2 weeks after they were due, you may bring an action to recover them (3-507.2(a)). If the court finds the employer withheld them without a bona fide dispute, it "may award the employee an amount not exceeding 3 times the wage, and reasonable counsel fees and other costs" (3-507.2(b)).
• A complaint to the state. For wages of $5,000 or less, you can file a complaint with the Commissioner of Labor and Industry, which can lead to an order to pay the wages plus 5% interest (3-507.1). The Division of Labor and Industry offers a Wage Claim Form for "problems collecting my wages, overtime, tips or pay for leave." Its page does not mention severance, so ask the Division whether it will take a severance claim before relying on this route.

Deadline

We found no deadline written specifically for Wage Payment and Collection Law claims. Maryland's default rule is that "a civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period" (Cts. & Jud. Proc. 5-101). We did not find a case applying it to a wage act claim, so treat 3 years as the general default, not a confirmed wage-claim deadline.

Severance and Maryland unemployment benefits

Severance reduces Maryland unemployment benefits. Under Lab. & Empl. 8-1009(a), for any week in which you receive or are eligible to receive severance, dismissal pay or wages in lieu of notice, "regardless of whether the payment is required by law":

"(i) if the payment at least equals the individual's weekly benefit amount, the individual is disqualified from receiving benefits; or (ii) if the payment is less than the individual's weekly benefit amount, the individual may receive benefits reduced by the amount of the payment."

The regulation is blunt: "Severance pay shall be deducted from benefits" (COMAR 09.32.02.12). It defines severance to include the gross amount, severance contingent on signing a release or waiver, dismissal pay, pay instead of notice, wage continuation and other pay on separation.

A lump sum is spread over the weeks after you leave. The regulation divides the total by your daily wage (your last weekly wage divided by 7) and applies the result to the days right after your last day of work. In a week where the severance assigned to it is less than your weekly benefit amount, you receive the difference. The Maryland Division of Unemployment Insurance gives this example: a claimant with a $300 weekly benefit who is getting $200 a week from severance receives the $100 difference.

One exception: military disability severance payments do not reduce benefits (8-1009(b)). For benefit amounts and how to file, see Maryland unemployment benefits.

What a Maryland severance agreement can and cannot require

We found two Maryland statutes that limit waivers in employment agreements. Under Lab. & Empl. 3-715, a provision in an employment contract, policy or agreement that "waives any substantive or procedural right or remedy to a claim that accrues in the future of sexual harassment or retaliation for reporting or asserting a right or remedy based on sexual harassment is null and void." An employer may not take adverse action against an employee who refuses to sign such a waiver, and an employer that tries to enforce one is liable for the employee's attorney's fees and costs.

Section 3-715 is about claims that arise in the future. Its text does not void a release, in a severance agreement, of claims that have already arisen.

The second is in the unemployment law: a release in a severance agreement cannot take away your right to unemployment benefits. Under Lab. & Empl. 8-106(a)(1), "An agreement by an individual to commute, release, or waive a right to benefits under this title is void," and under 8-1303 an employing unit may not "accept or require from an employee a waiver of a right to which the employee is entitled under this title."

We found no Maryland statute setting a review or revocation period for severance agreements, requiring a notice to consult a lawyer, or limiting nondisclosure terms for existing claims. That is a narrow search, not a confirmed negative. We also did not find a Maryland source on whether a severance release can waive a claim for unpaid wages; ask the Division of Labor and Industry or a lawyer before signing one that does.

Non-compete terms in a severance agreement

Maryland voids a non-compete in an employment contract "or a similar document or agreement" for employees earning 150% of the State minimum wage or less, for licensed health care workers in direct patient care earning $350,000 or less, and for licensed veterinary practitioners and technicians (Lab. & Empl. 3-716). For other employees the statute does not void the clause (higher-paid direct-care health workers get time and distance limits instead), so enforceability depends on the agreement and Maryland court decisions. Stevenson does show one consequence for pay: severance paid in exchange for a promise not to compete is not wages under the Wage Payment and Collection Law, so the Act's treble-damages remedy does not reach it.

Federal limits that also apply

These federal rules apply in Maryland; 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 Maryland severance offer

If you were let go in a layoff at an employer with 50 or more employees, ask whether it gave the state 60-day notice; a missing notice is reported to the Maryland Department of Labor, not paid to you. Keep the document that promised severance and note whether it ties the payment to your service or to a non-compete, since that is the line Stevenson draws. Report severance when you file for unemployment. Our severance pay laws guide has general guidance on reading and negotiating an offer.

Recent Maryland changes and pending bills

We searched 2025 and 2026 bill titles for severance, layoff, plant closing, Economic Stabilization, separation and wage payment terms and found no bill that would require severance or change 11-301 to 11-306, 3-501 or 8-1009. A title search can miss a change buried in a broadly titled bill, so check the General Assembly's site before relying on the absence of one.

Related

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

Disclaimer: This article provides general legal information about Maryland severance law (the Economic Stabilization Act, Lab. & Empl. 11-301 to 11-306; the Wage Payment and Collection Law, Lab. & Empl. 3-501, 3-505, 3-507.1 and 3-507.2; and Lab. & Empl. 8-1009 and 3-715) and the federal laws that apply in Maryland. It is not legal advice. The information was verified on October 8, 2026. For advice about your situation, contact the Maryland Department of Labor, a legal aid office or a lawyer licensed in Maryland.

Last updated: October 8, 2026.

Frequently Asked Questions

Is severance pay required by law in Maryland?

No. No Maryland statute requires severance. The Economic Stabilization Act requires 60 days' notice of certain layoffs from employers with 50 or more employees, and its regulation only says employers "should consider" severance (COMAR 09.33.02.05).

Does Maryland have a mini-WARN Act?

Yes. The Economic Stabilization Act (Lab. & Empl. 11-301 to 11-306) requires employers with 50 or more employees to give written notice at least 60 days before a reduction in operations that cuts at least 25% of the workforce or 15 employees, whichever is greater, over any 3-month period.

Do I get back pay if my Maryland employer did not give 60 days' notice?

Not under the Maryland Act. Section 11-306 lets the Secretary of Labor order compliance and assess a civil penalty of up to $10,000 per day; it contains no back-pay remedy for employees. Federal WARN, which has its own back-pay remedy, may apply if your employer has 100 or more employees, generally counting only full-time employees.

Is severance considered wages in Maryland?

It can be. The Wage Payment and Collection Law defines wages to include "any other remuneration promised for service" (3-501(c)), and Stevenson v. Branch Banking & Trust (2004) held that severance representing deferred pay for services can be recovered under the Act, while severance paid for a non-compete cannot.

What can I recover if my employer refuses to pay promised severance in Maryland?

If the severance counts as wages, you may sue once 2 weeks have passed from the due date, and a court may award up to 3 times the wage plus reasonable counsel fees and costs when the withholding was not a bona fide dispute (3-507.2).

Does severance affect unemployment in Maryland?

Yes. Under Lab. & Empl. 8-1009, a week of severance that at least equals your weekly benefit amount disqualifies you for that week, and a smaller amount reduces your benefit by that amount. COMAR 09.32.02.12 applies this to severance conditioned on signing a release.

How long do I have to sue for unpaid severance in Maryland?

We found no deadline written specifically for wage claims. Maryland's general rule is that a civil action must be filed within 3 years from the date it accrues unless another law sets a different period (Cts. & Jud. Proc. 5-101).

Can a Maryland severance agreement make me waive sexual harassment claims?

Under Lab. & Empl. 3-715, a provision waiving rights or remedies for a sexual harassment claim that accrues in the future is void. The statute's text does not reach a release of claims that have already arisen.