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

Oregon law does not require an employer to pay severance, and Oregon has no state plant-closing or mass-layoff notice law. The Bureau of Labor and Industries (BOLI), Oregon's wage agency, says severance is a wage agreement an employer may choose to offer, but once an employer has an established severance policy or agreement, it must honor it. Oregon's distinctive severance rule is about the agreement itself: ORS 659A.370 limits nondisclosure and non-disparagement terms covering workplace discrimination, including sexual assault.

For how other states handle severance, and the federal rules that apply everywhere, 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 Oregon law on severance pay: the absence of a state mandate or layoff-notice law, BOLI's position on promised severance, the wage payment rules in ORS chapter 652, the limits on separation agreements in ORS 659A.370 and 659A.380, and the unemployment rules in ORS chapter 657. Federal rules appear in short notes; the full federal layer is on our severance pay laws guide. For final pay deadlines, see Oregon final paycheck laws; for benefit amounts, see Oregon unemployment benefits.

Is severance pay required in Oregon?

No. BOLI's guidance says: "Vacation pay, holiday pay, bonuses, and severance pay are examples of wage agreements which may be made between employers and employees as a part of the employee's total compensation. There is no legal requirement to offer these benefits." The U.S. Department of Labor says federal law does not require severance either.

We confirmed this against the official text of ORS chapters 652 (wages), 653 (minimum wage), 657 (unemployment insurance) and 659A (employment discrimination), searching them for severance, dismissal pay, separation pay, plant closing and mass layoff. No section requires any employer to pay severance. We did not search every chapter of the Oregon Revised Statutes.

When an Oregon employer promised severance

BOLI's position is that a promise is binding: "Your employer is required to honor any established policy or agreement relating to the payment of benefits such as accrued vacation or severance pay upon termination." BOLI lists ORS 652.110, 652.120, 652.140 and 652.150 as the law behind its paycheck guidance.

No Oregon statute or court decision we found says in terms that promised severance is "wages" for Oregon's final pay deadline and penalty rules. BOLI's statement is the agency's position, and how it applies to a particular severance plan or agreement may depend on that document's terms.

When it must be paid

ORS 652.140(1) says that on a discharge or a termination by mutual agreement, "all wages earned and unpaid at the time of the discharge or termination become due and payable not later than the end of the first business day after the discharge or termination." Different deadlines apply when an employee quits; those are covered in Oregon final paycheck laws.

BOLI describes severance under a policy or agreement as payable "upon termination." Whether a severance that an agreement schedules for a later date counts as "earned and unpaid" at termination is not addressed by any source we found, so the agreement's own payment terms matter.

Penalty wages

If an employer willfully fails to pay the "wages or compensation" of an employee whose employment ends, ORS 652.150(1) continues the employee's wages at the same hourly rate for eight hours a day until paid or until an action begins, for up to 30 days. Under ORS 652.150(2), the penalty is capped at 100% of the unpaid wages unless the employer fails to pay within 12 days after written notice of nonpayment. Whether this penalty applies to unpaid severance depends on whether the severance counts as wages or compensation, which no Oregon source we found decides.

How to claim unpaid severance

BOLI's Wage and Hour Division takes wage claims. Its paycheck guidance says "you can file a wage claim, file a claim in the small claims court in the county in which the employer is located (if the amount is $10,000 or less), or consult an attorney." We did not find a published filing deadline for BOLI wage claims, so file promptly. A lawsuit to collect promised severance as a contract debt generally must be filed within six years (ORS 12.080), but a claim for penalty wages under ORS 652.150 must be filed within three years (ORS 12.100(2)).

Severance and Oregon unemployment benefits

The Oregon Employment Department says severance does not go on your weekly claim: "You do NOT have to report severance pay, accrued leave after separating from your employer, disability that is not paid by your employer, Social Security, jury duty pay, and weekend or annual drill earnings on your weekly claim for benefits." Retirement or pension pay from a base-year employer's plan is a separate rule and is reportable.

The department's page does not distinguish a lump sum from continued salary or pay in lieu of notice, and we did not find an Oregon rule that addresses severance in terms. If your payments are structured unusually, ask the Employment Department. Benefit amounts and filing are covered in Oregon unemployment benefits.

What an Oregon severance agreement can ask you to give up

This is where Oregon law says the most about severance. Five Oregon statutes matter.

Nondisclosure and non-disparagement terms about discrimination

ORS 659A.370(1) makes it an unlawful employment practice "for an employer to enter into an agreement with a former, current or prospective employee, as a condition of employment, continued employment, promotion, compensation or the receipt of benefits, that contains a nondisclosure provision, a nondisparagement provision or any other provision that has the purpose or effect of preventing the employee from disclosing or discussing conduct" that is discrimination under ORS 659A.030 (including sexual assault), 659A.082 or 659A.112 and that occurred in the workplace, at an off-site work event the employer coordinated, or between the employer and the employee off the employment premises. Such a provision is void and unenforceable, subject to the exceptions below (ORS 659A.370(7)).

There is a narrow exception for agreements settling those claims. Under ORS 659A.370(2) and (3), an agreement may include a nondisclosure or non-disparagement provision, a provision keeping the settlement amount or facts confidential, or a no-rehire provision only when the employee requests it. The employer may not make a settlement offer conditional on that request, must give the employee a copy of its ORS 659A.375 policy, and the agreement "must provide that the employee has at least seven days after executing the agreement to revoke the agreement." It does not take effect until that period ends.

The limits do not apply where the employer makes a good-faith determination that the employee engaged in the prohibited conduct, and an employer may still enforce nondisclosure terms unrelated to that conduct (ORS 659A.370(4), (8)). An employee can file a complaint with BOLI under ORS 659A.820 or sue; a violation carries a civil penalty of up to $5,000 plus the relief in ORS 659A.885(1)-(3) (ORS 659A.370(5)). The section was last amended in 2022 (Oregon Laws 2022, chapter 107).

Severance paid to a manager found responsible

Under ORS 659A.380, a severance or separation-payment agreement with a person who can hire, fire or control employees "is voidable by the employer if, after the employer conducts a good faith investigation," it determines that person violated ORS 659A.370 or the employer's ORS 659A.375 policy and that this was a substantial contributing factor in the separation.

Waiving wage claims

ORS 652.360(1) says an employer "may not by special contract or any other means exempt the employer from any provision of or liability or penalty imposed by ORS 652.310 to 652.414 or any statute relating to the payment of wages," unless BOLI's commissioner approves the contract in writing. But under ORS 652.360(2), a settlement of "a known and identified claim" does not need the commissioner's approval "if the settlement does not provide for the employee to relinquish a claim for additional or future violations." We found no Oregon case on whether a general "all claims" release in a severance agreement covers wage claims the employee did not know about.

Unemployment rights

A release in a severance agreement cannot take away your right to unemployment benefits. Under ORS 657.855(1), "No agreement by an individual to waive the individual's rights under this chapter is valid."

Review periods

Apart from the 7-day revocation window in ORS 659A.370(2) for agreements settling discrimination claims, we found no Oregon statute requiring a review or revocation period for a severance agreement. If you are 40 or older, federal law gives you at least 21 days to consider a release of age-discrimination claims (45 in a group layoff) and 7 days to revoke it after signing (29 U.S.C. 626(f)). Other federal limits are on our severance pay laws guide.

Non-compete terms in a severance agreement

Oregon voids an employee non-compete unless, among other conditions, the employer disclosed it in a written job offer at least two weeks before the first day of work or the employee signed it upon a bona fide advancement (ORS 653.295(1)), so a non-compete first added in a severance agreement does not meet that timing rule on the statute's face. A promise not to solicit customers or co-workers is outside those limits (ORS 653.295(5)).

No Oregon WARN act

We found no Oregon law requiring notice before a plant closing or mass layoff. Oregon's Higher Education Coordinating Commission describes only the federal act, "requiring employers to provide a 60-day notice to the affected employees and to both state and local representatives prior to a plant closing or mass layoff. OWI receives these notifications and shares the information publicly." OWI is the commission's Office of Workforce Investments.

Federal WARN covers employers with 100 or more employees not counting part-time employees, or 100 or more employees, counting part-time workers, who together work at least 4,000 hours a week not counting overtime (29 U.S.C. 2101(a)(1)). An employer that skips the required notice owes back pay and benefits for up to 60 days (29 U.S.C. 2104). Our severance pay laws guide explains who it covers.

Recent changes and bills

Apart from the medical-licensee law below, we found no Oregon bill enacted in the 2025 or 2026 sessions that changes severance, layoff notice or separation-agreement rules.

• SB 951 (2025) became law (Oregon Laws 2025, chapter 295). For contracts entered into or renewed after it took effect, it voids most non-competes that restrict a medical licensee's practice of medicine or nursing, and it voids nondisclosure and non-disparagement agreements between medical licensees and hospitals, hospital-affiliated clinics or management services organizations, except after the licensee leaves employment or in a negotiated settlement.

Two bills that did not pass are worth knowing:

• HB 4094 (2026) would have required employers whose written policy or contract pays out earned, unused paid time off at termination to pay it under the final-wage rules. It was still in a House committee when the session adjourned. It concerned paid time off, not severance.
• HB 3227 (2025) would have voided non-compete, nondisclosure, non-disparagement and non-solicitation agreements between certain business entities and medical professionals. It failed in a House committee; SB 951 above was enacted on a narrower version of the same subject.

We did not review the 2024 short session, and bills for the 2027 session had not been filed as of the verification date.

Related

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

Disclaimer: This article provides general legal information about Oregon severance pay law (ORS chapter 652 on wage payment, ORS 659A.370 and 659A.380 on separation agreements, and ORS chapter 657 on unemployment insurance) and the federal laws that apply in Oregon. It is not legal advice. The information was verified on October 8, 2026. For advice about your situation, contact the Oregon Bureau of Labor and Industries, the Oregon Employment Department, a legal aid office, or a lawyer licensed in Oregon.

Last updated: October 8, 2026.

Frequently Asked Questions

Is severance pay required by law in Oregon?

No. BOLI says severance is a wage agreement employers and employees may make and "There is no legal requirement to offer these benefits." Federal law does not require severance either.

Does my employer have to pay severance it promised in Oregon?

BOLI says an employer "is required to honor any established policy or agreement relating to the payment of benefits such as accrued vacation or severance pay upon termination." You can file a wage claim with BOLI, use small claims court for $10,000 or less, or consult a lawyer.

Does severance affect unemployment in Oregon?

The Oregon Employment Department says, "You do NOT have to report severance pay" on your weekly claim for benefits. Its page does not distinguish a lump sum from continued salary or pay in lieu of notice.

Can an Oregon severance agreement include a nondisclosure clause?

Not one an employer requires that covers discrimination, including sexual assault, in the workplace (ORS 659A.370). In an agreement settling such a claim, a nondisclosure or non-disparagement term is allowed only if the employee requests it, and the employee gets at least 7 days after signing to revoke.

Can a severance agreement make me give up unemployment benefits in Oregon?

No. ORS 657.855(1) says no agreement by an individual to waive the individual's rights under Oregon's unemployment insurance law is valid.

When is final pay due after a layoff in Oregon?

ORS 652.140(1) makes all wages earned and unpaid due by the end of the first business day after a discharge or a termination by mutual agreement. Whether a severance payable on a later contract date falls under that deadline is not settled by any source we found.

Does Oregon have a state WARN Act?

We found none. Oregon follows the federal WARN Act, which requires covered employers to give 60 days' notice before a plant closing or mass layoff; Oregon's Office of Workforce Investments receives those notices and publishes them.