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

No. We found no Michigan law that requires an employer to pay severance and no Michigan WARN Act; the state's labor department describes only the federal WARN Act's notice rules for Michigan layoffs. The Michigan statute that does name severance is the unemployment law: severance payments, pay in lieu of notice and salary continuation count as remuneration that reduces unemployment benefits for the period they are assigned to (MCL 421.48(2)).

Michigan's wage-payment law, the Payment of Wages and Fringe Benefits Act, does not mention severance at all, so whether promised severance is a "wage" under that Act is an open question. For how other states handle severance, see our severance pay laws by state guide.

Information last verified on October 7, 2026. This article has not been reviewed by a licensed lawyer.

Jurisdiction scope: This article covers Michigan law on severance pay: the Payment of Wages and Fringe Benefits Act (1978 PA 390, MCL 408.471 et seq.) and the severance rules of the Michigan Employment Security Act (MCL 421.48 and 421.27), with short notes on the federal rules that apply in Michigan; the full federal rules are on our severance pay laws guide. It does not cover when your last regular paycheck is due; see Michigan final paycheck laws. It does not cover benefit amounts or how to file; see Michigan unemployment benefits.

Is severance pay required in Michigan?

No Michigan statute we found requires severance. We read the operative sections of the Payment of Wages and Fringe Benefits Act (MCL 408.471, 408.472, 408.473, 408.474, 408.475, 408.477, 408.481 and 408.483) on the Legislature's website, and none of them requires an employer to pay it.

The Legislature has been asked to create a requirement and has not. HB 5890 of 2024 would have required employers to make payments in relocations and mass layoffs; it was referred to the Committee on Labor on July 30, 2024 and saw no further action before the 2023-2024 session ended. We searched the Legislature's site for other severance and plant-closing bills but could not run its own bill search, so this finding rests on Act 390 and that bill sweep rather than a keyword search of every chapter of the Michigan Compiled Laws.

Federal law does not fill the gap: the U.S. Department of Labor says severance pay is a matter of agreement between employer and employee, not a Fair Labor Standards Act requirement. So severance in Michigan comes from a promise in a contract, a company policy or plan, or a separation agreement. Whether your employer could end your job at all is a separate question, covered on our Michigan at-will employment page.

Does Michigan have a WARN Act?

We found no Michigan WARN Act. The Department of Labor and Economic Opportunity (LEO) describes only the federal law on its WARN page: 60 days of notice to affected workers or their representatives, to LEO Workforce Development and to local government, for a facility closure affecting 50 or more workers within 30 days, or a layoff of 500 or more workers (or 50 to 499 if they make up at least 33 percent of the workforce), with smaller layoffs within 90 days added together. The LEO page does not itself say that Michigan lacks a state act; the bills that would have created one, such as HB 5890, did not pass.

Under the federal Act, which covers 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), an employer that skips the notice owes back pay and benefits for each day of the violation, up to 60 days and no more than half the days the employee worked there, and only a federal court enforces it (29 U.S.C. 2101, 2104). Our severance pay laws guide covers the federal thresholds and exceptions.

Is promised severance a "wage" under Michigan law?

Michigan's wage law does not answer the question. Act 390 defines wages broadly, but carves out fringe benefits:

"'Wages' means all earnings of an employee ... for labor or services except those defined as fringe benefits under subdivision (e) above." (MCL 408.471)

The fringe-benefit definition in MCL 408.471(e) is a list: holiday pay, sickness or injury pay, personal or vacation time, bonuses, expenses and contributions. Severance is not on it. For the listed fringe benefits, MCL 408.473 requires payment "in accordance with the terms set forth in the written contract or written policy."

Because the Act does not mention severance and leaves it off the fringe-benefit list, no source we reviewed says whether a promise of severance can be enforced under Act 390, and we did not review any Michigan court decision on the point. A written agreement or policy is still the document that sets what you were promised and when, so keep a copy of it.

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

When must severance be paid in Michigan?

Michigan's final-pay rule does not mention severance. MCL 408.475(2) says: "An employer shall immediately pay to an employee who has been discharged from employment all wages earned and due, as soon as the amount can with due diligence be determined." The Wage and Hour Division's FAQ says a final paycheck is due on the next scheduled payday, citing administrative rule R 408.9007(1).

Whether either rule applies to severance depends on whether severance is "wages" under Act 390, which is unresolved. In practice, the payment date for severance is whatever the agreement or policy sets. For your last regular paycheck, see Michigan final paycheck laws.

How to file a wage complaint in Michigan

LEO's Bureau of Employment Relations, Wage and Hour Division, takes complaints for non-payment of wages and fringe benefits. A written complaint must be filed within 12 months after the alleged violation (MCL 408.481(1)); the Division's page gives up to three years for minimum wage and overtime claims.

The Division's pages do not say whether it accepts a complaint about severance alone, and the sources we reviewed do not address whether a release in a severance agreement can waive a Michigan wage claim. If severance promised in a written contract or policy was not paid, contact the Division about whether it will take the complaint, keeping the 12-month deadline in mind.

Severance and Michigan unemployment benefits

Severance reduces Michigan unemployment benefits, and the Michigan Employment Security Act says so expressly. MCL 421.48(2) treats as remuneration "amounts paid in the form of retroactive pay, pay in lieu of notice, severance payments, salary continuation, or other remuneration intended by the employing unit as continuing wages or other monetary consideration as the result of the separation." Supplemental unemployment benefit (SUB) payments are excluded.

That remuneration is assigned to the period the separation agreement designates, or, if the agreement does not designate one, the period the employer designates (MCL 421.48(2)). The reduction then follows MCL 421.27(c):

• Partial reduction. Your weekly benefit is reduced by 50 cents for each whole dollar of remuneration in the benefit week.
• The 1.5 times cap. Benefits plus remuneration for the week cannot exceed 1-1/2 times your weekly benefit amount; benefits are reduced by $1 for each dollar over that cap.
• Weeks used up. A week in which your benefit is reduced but not eliminated still counts as one full week against your total weeks of benefits (MCL 421.27(c)(4)).

The Unemployment Insurance Agency's Fact Sheet 125 (revised July 2026) explains how this plays out by payment type:

The fact sheet also says you must report severance pay to the UIA if you receive it, or expect to receive it, after you file your claim. For benefit amounts and filing, see Michigan unemployment benefits.

What a Michigan severance agreement can and cannot require

Apart from the unemployment rule below, we found no Michigan statute in force that limits release, confidentiality or non-disparagement terms in a private severance agreement, and no state-law review or revocation period. That finding rests on searches and a bill-status check, not a keyword search of the entire code, so treat it as an open question rather than a confirmed absence. One pending bill, HB 5508, is described below.

A release in a severance agreement cannot take away your right to unemployment benefits. Under MCL 421.31, an agreement by an individual to waive, release, or commute rights to benefits or other rights under the Michigan Employment Security Act is not valid, and no employer shall "require or accept any waiver of any right hereunder by any individual in his employ."

Non-compete terms in a severance agreement

If the agreement includes a non-compete, Michigan allows it only if it protects a reasonable competitive business interest and is reasonable in length, geographic area and type of work, and a court can narrow an unreasonable one and enforce the narrower version (MCL 445.774a(1)).

Federal limits that also apply

These federal rules apply in Michigan; 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 Michigan severance offer

Look at whether the agreement assigns the severance to a period of weeks, because under MCL 421.48(2) that designation decides which weeks of unemployment benefits it reduces; if the agreement is silent, the employer's designation controls. Note whether the money comes as a lump sum or as salary continuation, and plan to report it to the UIA. If you believe the layoff was retaliation for reporting a suspected violation of law to a public body, a lawsuit under Michigan's Whistleblowers' Protection Act must be filed within 90 days (MCL 15.363(1)), and a severance release may give that claim up. Our severance pay laws guide has general guidance on reading and negotiating an offer.

Pending and recent Michigan bills

As introduced, HB 5508 would reach only settlements of sex-based assault, discrimination, harassment or retaliation claims made in a complaint to the Department of Civil Rights or in a lawsuit, so it would not cover a routine severance release where no such claim was filed; it would still allow the settlement amount, and at the claimant's request the claimant's identity, to stay confidential. We also could not rule out a 2025-2026 severance or WARN bill that our search missed. Check the Legislature's bill pages before relying on that point.

Related

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

Disclaimer: This article provides general legal information about Michigan severance pay law (the Payment of Wages and Fringe Benefits Act, MCL 408.471 et seq., and the Michigan Employment Security Act, MCL 421.27 and 421.48) and the federal laws that apply in Michigan. It is not legal advice. The information was verified on October 7, 2026. For advice about your situation, contact LEO's Wage and Hour Division or the Unemployment Insurance Agency, a legal aid office or a lawyer licensed in Michigan.

Last updated: October 7, 2026.

Frequently Asked Questions

Is severance pay required by law in Michigan?

No. No section of the Payment of Wages and Fringe Benefits Act (1978 PA 390) requires severance, and bills that would have required layoff payments did not pass. Severance in Michigan comes from a contract, policy or separation agreement.

Does Michigan have its own WARN Act?

We found none. The Department of Labor and Economic Opportunity describes only the federal WARN Act, which requires 60 days of notice generally from employers with 100 or more full-time employees (29 U.S.C. 2101-2102), and receives those notices through LEO Workforce Development.

Is severance considered wages in Michigan?

Michigan's wage law does not say. It defines wages as all earnings for labor or services except listed fringe benefits, and severance is not on that list (MCL 408.471). We found no Michigan source that resolves the question.

Does severance affect unemployment in Michigan?

Yes. Severance payments, pay in lieu of notice and salary continuation count as remuneration for the period the agreement or employer assigns them to (MCL 421.48(2)), and remuneration reduces weekly benefits under MCL 421.27(c).

Does a lump-sum severance stop my Michigan unemployment benefits?

According to UIA Fact Sheet 125, a lump sum the employer does not assign to a period reduces benefits only in the week you receive it. A lump sum assigned to a period reduces benefits in the weeks it is assigned to.

Do I have to report severance to the Michigan UIA?

Yes. UIA Fact Sheet 125 says you must report severance pay you receive or expect to receive after filing your claim.

How long do I have to file a wage complaint in Michigan?

A written complaint for unpaid wages or fringe benefits must be filed within 12 months after the alleged violation (MCL 408.481(1)). The Wage and Hour Division's pages do not say whether it accepts a complaint about severance alone.

How long do I have to sign a severance agreement in Michigan?

We found no Michigan statute that sets a review or revocation period. If you are 40 or older, federal law gives you at least 21 days to consider a release of age claims, 45 in a group layoff, and 7 days to revoke it (29 U.S.C. 626(f)).