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

No. Pennsylvania has no law that requires an employer to pay severance, and it has no state WARN Act; only the federal WARN Act's notice rules apply to Pennsylvania layoffs. What Pennsylvania law does is make promised severance collectible: the Wage Payment and Collection Law (WPCL) defines "fringe benefits or wage supplements" to include "separation, vacation, holiday, or guaranteed pay," and it counts wage supplements as wages (WPCL section 2.1, 43 P.S. 260.2a).

Pennsylvania also has a specific rule for severance and unemployment: only the part of your severance above 40 percent of the state average annual wage, $28,153.63 for benefit years that begin in 2026, is deducted from unemployment compensation (43 P.S. 804(d)). 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 Pennsylvania law on severance pay: separation pay as a wage supplement under the Wage Payment and Collection Law (43 P.S. 260.1 et seq.) and the severance offset in the Unemployment Compensation Law (43 P.S. 804(d)), with short notes on the federal rules that apply in Pennsylvania; the full federal rules are on our severance pay laws guide. It does not cover when your last regular paycheck is due; see Pennsylvania final paycheck laws. It does not cover benefit amounts; see Pennsylvania unemployment benefits.

Is severance pay required in Pennsylvania?

No Pennsylvania statute requires an employer to pay severance. We read the full current text of the Wage Payment and Collection Law (Act of July 14, 1961, P.L. 637, No. 329) and the Unemployment Compensation Law on the General Assembly's official site. The WPCL regulates when promised separation pay must be paid, and the Unemployment Compensation Law offsets severance against benefits; neither requires an employer to pay it.

The 2025-2026 legislative session confirms the point from the other direction: the only mandatory-severance bill we found, SB 321, is pending in committee, which means no such requirement exists today (see the pending bills section below). We did not run a full-text keyword search across every title of the Pennsylvania Consolidated Statutes and Purdon's Title 43, so this is a finding for the two principal statutes, the agency pages and the bill index rather than an exhaustive one. Federal law does not fill the gap: the U.S. Department of Labor says the Fair Labor Standards Act contains no severance requirement.

That leaves three places severance money can come from in Pennsylvania: a contract or offer letter, a company severance plan or policy, or a separation agreement offered at the exit. Whether you could be let go at all is a separate question, covered on our Pennsylvania at-will employment page.

Does Pennsylvania have a WARN Act?

No. The Pennsylvania Department of Labor and Industry's WARN pages describe only the federal WARN Act, and a pending bill, HB 815, would create a "Pennsylvania WARN Act," which tells you none exists now. Pennsylvania layoffs are governed by the federal law alone.

Federal WARN requires an employer 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), to give 60 days of written notice before a plant closing or mass layoff (29 U.S.C. 2101(a)(1), 2102(a)). An employer that skips the notice owes back pay and benefits for up to 60 days, and no more than half the days the employee worked there; only a federal court enforces the Act (29 U.S.C. 2104). Our severance pay laws guide covers the federal thresholds and exceptions in full.

In Pennsylvania, the Department of Labor and Industry's Rapid Response office (Bureau of Workforce Development Partnership and Operations) receives copies of WARN notices, at RA-LI-BWPO-Rapid@pa.gov.

Promised severance is a wage supplement under the WPCL

Once an employer promises severance, Pennsylvania law treats it as pay you can collect. WPCL section 2.1 (43 P.S. 260.2a) defines "fringe benefits or wage supplements" to include "all monetary employer payments to provide benefits under any employe benefit plan ... as well as separation, vacation, holiday, or guaranteed pay," and "any other amount to be paid pursuant to an agreement to the employe." The same section includes fringe benefits and wage supplements in the definition of "wages."

In Oberneder v. Link Computer Corp., 548 Pa. 201, 696 A.2d 148 (1997), the court described the WPCL as giving employees a statutory remedy to recover wages and other benefits contractually due to them, and held that an award of attorney's fees to a prevailing employee is mandatory. The WPCL reaches pay due under an agreement, so the promise comes first: the law does not create severance where no contract, plan or agreement provides 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)), and we did not research how Pennsylvania courts handle that overlap for severance plans. 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 Pennsylvania?

Separation pay follows the WPCL's rule for wage supplements, not the final-paycheck rule. Section 3(b) (43 P.S. 260.3) requires wage supplements to be paid "within 10 days after such payments are required to be made directly to the employe, or within 60 days of the date when proper claim was filed by the employe in situations where no required time for payment is specified."

So if your agreement or plan sets a payment date, the WPCL deadline is 10 days after that date; if it sets no date, the 60-day period runs from when you file a proper claim. Your last regular wages follow a different rule in WPCL section 5(a); see Pennsylvania final paycheck laws for that deadline.

How to recover unpaid severance in Pennsylvania

You can file a Wage Payment and Collection complaint with the Department of Labor and Industry's Bureau of Labor Law Compliance, or bring your own lawsuit. The deadline is set by statute, not by the agency: no administrative proceeding or legal action for unpaid wages or liquidated damages may be brought more than three years after the day the wages were due and payable (WPCL section 9.1(g)). The agency's complaint page does not state a filing deadline or mention severance by name.

The WPCL gives the claim real weight:

• Agency notice and penalty. The Department may notify the employer of the claim, and an employer that does not pay within 10 days after certified notice, without a satisfactory explanation, faces a 10 percent penalty (WPCL section 9.1).
• Liquidated damages. Where there is no good-faith dispute, the employer can owe liquidated damages of 25 percent of the unpaid amount or $500, whichever is greater, once wages stay unpaid 30 days past the regular payday or, for pay with no regular payday, 60 days after you file a proper claim or 60 days after the date of the agreement or other act that made the pay due (WPCL section 10).
• Attorney's fees. A fee award to a prevailing employee is mandatory (WPCL section 9.1; Oberneder, 1997).

Two more protections matter when you are negotiating. Section 7 says, "No provision of this act shall in any way be contravened or set aside by a private agreement." Section 6 says that accepting a payment the employer does not dispute "shall not constitute a release as to the balance of his claim." How Pennsylvania courts treat a negotiated release of WPCL claims inside a severance agreement was outside the sources we reviewed.

Severance and Pennsylvania unemployment compensation

Severance does not automatically block unemployment compensation in Pennsylvania. Under section 404(d) of the Unemployment Compensation Law (43 P.S. 804(d)), as amended by Act 6 of 2011, 40 percent of the state average annual wage is subtracted from the total severance paid or payable, and only the remainder is deducted. The Department of Labor and Industry states: "For Benefit Years that begin in 2026, 40% of Pennsylvania's average annual wage is $28153.63." A claimant whose benefit year began in an earlier year uses that year's figure.

The law defines severance broadly: "'Severance pay' means one or more payments made by an employer to an employe on account of separation from the service of the employer, regardless of whether the employer is legally bound by contract, statute or otherwise to make such payments." Payments for pension, retirement or accrued leave, and supplemental unemployment benefits, are excluded from that definition.

The deductible severance is attributed to the days or weeks immediately following your separation. The number of weeks equals the deductible amount divided by your regular full-time weekly wage, and each of those weeks is charged at your full regular weekly wage, so you usually receive no benefits for them. In the Department's example, $35,000 in severance minus $28,153.63 leaves $6,846.37; at a $1,100 weekly wage, that means no benefits for the first six weeks and a reduced seventh week. The rule applies to benefit years that began on or after January 1, 2012 with severance agreements made on or after that date, according to the Department.

The Department's severance FAQ does not distinguish a lump sum from installments or pay in lieu of notice, but the statutory definition reaches any payment made on account of separation. See Pennsylvania unemployment benefits for benefit amounts and the claims process.

What a Pennsylvania severance agreement can and cannot require

Apart from the unemployment rule below, we found no Pennsylvania statute that limits confidentiality, non-disparagement or release terms in a separation agreement, but our search for one was not exhaustive. The other state-law protections that apply come from the WPCL: a private agreement cannot set aside the Act (section 7), and accepting an undisputed partial payment does not release the rest of a wage claim (section 6).

A release in a severance agreement cannot take away your right to unemployment compensation. Section 701 of the Unemployment Compensation Law provides that "No agreement by an employe to waive, release, or commute his rights to compensation, or any other rights under this act, shall be valid," and that no employer shall "require or accept any waiver by an employe of any right hereunder."

Non-compete terms for health care practitioners

Under the Fair Contracting for Health Care Practitioners Act, a non-compete entered into after the Act took effect on January 1, 2025 with a medical doctor, doctor of osteopathy, certified registered nurse anesthetist, certified registered nurse practitioner or physician assistant is void, except that an employer may enforce one lasting no more than one year if the practitioner was not dismissed by the employer (Act 74 of 2024, section 4). The Act covers only those practitioners and only covenants that limit their ability to keep treating or accepting patients, and it does not void a non-compete tied to the sale of a practice or to an ownership interest in it (section 4(c)).

Federal limits that also apply

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

• 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, among other requirements (29 U.S.C. 626(f)).
• Sexual harassment and assault. Under the Speak Out Act, a nondisclosure or non-disparagement clause agreed to before a sexual assault or sexual harassment 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 National Labor Relations Board's McLaren Macomb decision, 372 NLRB No. 58 (2023), bars severance agreements that require employees to broadly give up their rights under the National Labor Relations Act. In memo GC 26-04 (August 26, 2026) the NLRB's General Counsel said she is arguing to overrule it in Valley Radiology, P.A. (10-CA-324512), a case still open, so the decision remains Board law until the Board acts.

Reading a Pennsylvania severance offer

Check the payment date the agreement sets, because the WPCL's 10-day rule runs from that date. If you expect to claim unemployment, compare the total severance to the $28,153.63 figure for benefit years that begin in 2026, since only the amount above it is deducted. If an employer pays part of what it promised and disputes the rest, cashing the undisputed payment does not release the balance (WPCL section 6). If you think the layoff was discriminatory, keep the state deadline in mind while you review: a Pennsylvania Human Relations Act complaint must be filed within 180 days of the alleged act (43 P.S. 959(h)). Our severance pay laws guide has general guidance on reading and negotiating an offer.

Pending Pennsylvania bills (not law)

Two 2025-2026 bills would change Pennsylvania layoff law. Neither has left committee.

Both statuses were checked on October 7, 2026. Check the bill pages before relying on either.

Related

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

Disclaimer: This article provides general legal information about Pennsylvania severance pay law (the Wage Payment and Collection Law, 43 P.S. 260.1 et seq., and section 404(d) of the Unemployment Compensation Law, 43 P.S. 804(d)) and the federal laws that apply in Pennsylvania. It is not legal advice. The information was verified on October 7, 2026. For advice about your situation, contact the Pennsylvania Department of Labor and Industry's Bureau of Labor Law Compliance, a legal aid office or a lawyer licensed in Pennsylvania.

Last updated: October 7, 2026.

Frequently Asked Questions

Is severance pay required by law in Pennsylvania?

No. Pennsylvania law does not require an employer to pay severance. Once an employer promises separation pay, though, the Wage Payment and Collection Law treats it as a wage supplement you can collect (WPCL section 2.1).

Does Pennsylvania have its own WARN Act?

No. The Department of Labor and Industry describes only the federal WARN Act, which generally covers employers with 100 or more full-time employees and requires 60 days of notice (29 U.S.C. 2101-2102). HB 815 would create a Pennsylvania WARN Act but has been in committee since March 5, 2025.

Is severance pay considered wages in Pennsylvania?

Yes, once it is promised. WPCL section 2.1 (43 P.S. 260.2a) defines wage supplements to include separation pay, and wages include wage supplements.

When does an employer have to pay severance in Pennsylvania?

Within 10 days after the payment is required to be made, or within 60 days after you file a proper claim when the agreement sets no payment date (WPCL section 3(b), 43 P.S. 260.3).

How long do I have to file a claim for unpaid severance in Pennsylvania?

No administrative proceeding or lawsuit for unpaid wages or liquidated damages can be brought more than three years after the wages were due and payable (WPCL section 9.1(g)).

What can I recover if my Pennsylvania employer does not pay promised severance?

The unpaid amount, mandatory attorney's fees, and liquidated damages of 25 percent or $500, whichever is greater, when, without a good-faith dispute, wages stay unpaid 30 days past the regular payday or, for pay with no regular payday, 60 days after you file a proper claim or after the date of the agreement making it payable (WPCL sections 9.1 and 10). In Oberneder v. Link Computer Corp. (1997), the court held a fee award to a prevailing employee is mandatory.

Does severance affect unemployment in Pennsylvania?

Only the part above 40 percent of the state average annual wage counts, which the Department of Labor and Industry puts at $28,153.63 for benefit years that begin in 2026 (43 P.S. 804(d)). That deductible part is attributed to the weeks immediately after your separation.

Can a Pennsylvania severance agreement make me give up unpaid wages?

WPCL section 7 says no provision of the law can be contravened or set aside by a private agreement, and section 6 says accepting an undisputed payment does not release the balance of your claim. How Pennsylvania courts treat a negotiated release of wage claims was outside the sources we reviewed.

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

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