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

No Wisconsin statute we reviewed requires an employer to pay severance when it lays someone off or lets them go. What Wisconsin law does is protect severance that has already been promised: Wis. Stat. 109.01(3) lists "severance pay or dismissal pay" among the wages an employer owes when it was agreed upon or provided as an established policy. That brings promised severance under the state's wage-payment law, with Department of Workforce Development enforcement and increased-wage penalties.

Wisconsin also has its own plant-closing law, Wis. Stat. 109.07, which reaches smaller employers than the federal WARN Act. For how every state compares, 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 Wisconsin law on severance pay: the wage definition and wage-payment rules in Wis. Stat. chapter 109, the business closing and mass layoff law in Wis. Stat. 109.07, and the unemployment rules on termination pay in Wis. Stat. 108.05. Federal rules appear only in short notes; the full federal layer is on our severance pay laws guide. This page does not cover when your regular final wages are due (see Wisconsin final paycheck laws) or how much unemployment pays (see Wisconsin unemployment benefits).

Is severance pay required in Wisconsin?

No Wisconsin statute we reviewed creates a right to severance in the first place. We read the main sections of the wage-payment chapter (Wis. Stat. 109.01, 109.015, 109.03, 109.07, 109.075, 109.09 and 109.11) and the termination-pay provisions of the unemployment chapter (108.02(4m) and 108.05(3) and (5)). None requires an employer to offer severance. We did not search every Wisconsin statute, so treat this as what our review found, not a guarantee that no law anywhere touches severance.

The U.S. Department of Labor says the federal Fair Labor Standards Act does not require severance either; it is a matter of agreement between employer and employee. Whether you can be let go at all is a separate question, covered in Wisconsin at-will employment laws.

So in Wisconsin, severance is owed when something promised it: an employment contract or offer letter, a company severance plan or established policy, a separation agreement, or a union contract.

Promised severance is "wages" under Wisconsin law

Wisconsin's wage statute names severance directly. Wis. Stat. 109.01(3) defines wages as "remuneration payable to an employee for personal services," and the list it gives includes "severance pay or dismissal pay," as well as bonuses and "any other similar advantages agreed upon between the employer and the employee or provided by the employer to the employees as an established policy."

The key word is payable. The definition does not create severance; it covers severance that an agreement or established policy already makes due. Once it is due, it carries the same protections as unpaid wages.

One limit matters for many severance agreements. Chapter 109 does not cover corporate officers and directors, LLC members and managers, partners, sole proprietors, or anyone employed in a managerial, executive or commissioned sales capacity or privy to confidential matters in the employer-employee relationship (Wis. Stat. 109.01(1r)). If that describes your job, the DWD wage claim and the increased-wage penalties below may not be available, and unpaid severance would generally be pursued as a breach of your agreement.

DWD's wage claim page lists severance pay among the wage types its Labor Standards Bureau can act on, for amounts agreed on between employer and employee.

One federal point can change the path. An ongoing company severance plan can be an employee benefit plan under ERISA, which supersedes state laws that relate to covered plans (29 U.S.C. 1002(1), 1144(a)). If your severance comes from a formal plan, the U.S. Department of Labor's Employee Benefits Security Administration may be able to help; our severance pay guide explains the plan rules.

How to claim unpaid severance in Wisconsin

You have two routes, and you do not have to use the first before the second.

File a wage claim with DWD. DWD's Equal Rights Division, Labor Standards Bureau, investigates and tries to adjust wage claims (Wis. Stat. 109.09(1)). The statute lets DWD take a claim filed no later than 2 years after the date the wages are due, and look back 2 years before the filing date. DWD's own page describes the 2 years as running from when wages were earned; the statute's wording is "due," so measure from the due date and file early if you are unsure. Claims can be filed online or on a Labor Standards Complaint form. DWD says it may not have authority to act on unpaid bills, independent contractor claims, claims already filed in court, or some claims against out-of-state employers, and it advises union members to file wage claims through their local union representative.

Sue directly. Wis. Stat. 109.03(5) lets an employee bring a court action for unpaid wages without first filing with DWD. A lawsuit to recover unpaid wages or other compensation for personal services generally must be filed within 2 years after the claim accrues (Wis. Stat. 893.44(1)), and a court action on a claim filed with DWD must be brought within 2 years after the DWD filing (893.44(2)).

What the law can add on top of the unpaid severance:

DWD can also compromise and settle a wage claim for a sum the department, the employee and the employer agree on (Wis. Stat. 109.11(1)(a)).

When does severance have to be paid in Wisconsin?

Wisconsin has no deadline written for severance specifically. It has two final-pay rules that cover wages in general, and severance is wages once it is payable:

• Ordinary separation. An employee other than a commissioned sales agent who is discharged or quits, and has no written contract for a definite period, must be paid in full by the next regular payday or the date required under 109.03(1), whichever is earlier (Wis. Stat. 109.03(2)). DWD says a claim may be filed if payment is not received 6 days after the scheduled payday.
• Closings, sales and relocations. When employees are separated because the employer merges, liquidates or disposes of the business, ceases operations in whole or in part, or relocates, the employer must pay all unpaid wages at the usual place of payment "within 24 hours of the time of separation" (Wis. Stat. 109.03(4)).

We found no court decision or DWD guidance on how these rules apply to severance that a plan or agreement pays in installments after you leave, so this page does not say. The schedule in your agreement or plan is the starting point. For your regular final wages, see Wisconsin final paycheck laws.

Wisconsin's plant-closing law: notice or pay

Wisconsin's business closing and mass layoff law, Wis. Stat. 109.07, is not a severance mandate. It requires notice, and it turns into a pay obligation only when an employer skips or shortens the notice.

Who is covered. Any business enterprise that employs 50 or more persons in Wisconsin (109.07(1)(d)). DWD's summary page adds that the law does not cover federal or state government and their political subdivisions, charitable or tax-exempt institutions and organizations, or independent contractors; that carve-out is DWD's statement, and we did not find it in the text of 109.07 itself.

What triggers it. Both counts leave out new or low-hour employees, meaning those employed fewer than 6 of the preceding 12 months or averaging fewer than 20 hours a week (109.07(1)(h)):

• A business closing: a permanent or temporary shutdown of an employment site, or of one or more facilities or operating units at a site or within a single municipality, that affects 25 or more employees (109.07(1)(b)).
• A mass layoff: a reduction that is not a closing and affects, at one site or within a single municipality, at least 25% of the work force or 25 employees, whichever is greater, or at least 500 employees (109.07(1)(f)).

What the employer must do. Give written notice no later than 60 days before the closing or layoff to every affected employee, any union representing them, the highest official of the municipality, and the DWD unit that administers Wis. Stat. 106.15 (109.07(1m)(a)). The notice to employees must include contact information for the local workforce development board. The law does not apply to closings or layoffs caused by a strike or lockout (109.07(1m)(c)), and it lists other exceptions, including an employer actively seeking capital, a sale where the buyer agrees to hire substantially all employees, unforeseeable business circumstances and disasters (109.07(5), (6)).

What a worker can recover. If the employer fails to give timely notice, each affected employee may recover pay for the days in the recovery period the employee would have worked, plus the value of lost benefit-plan coverage, including medical costs that would have been covered (109.07(3)(a)). The recovery period starts on the day of the closing or layoff and lasts as many days as the notice was late (109.07(3)(c)). Late notice to the municipality can bring a surcharge of up to $500 per day (109.07(4m)(a)).

How to claim. File with DWD no later than 300 days after the closing or layoff. DWD investigates and refers unrecovered claims to the state Department of Justice; if the Department of Justice does not sue within 120 days of the referral, the employee may sue and, on winning, recover costs and reasonable attorney fees. That suit must begin within one year after DWD refers the claim (109.07(4)). DWD's Equal Rights Division takes these claims (Madison 608-266-6860, Milwaukee 414-227-4384), and DWD posts the notices it receives on its WARN page.

A separate section, Wis. Stat. 109.075, requires advance notice when an employer of 50 or more persons stops providing health care benefits to employees or retirees; this page does not cover its terms.

Federal WARN runs alongside the state law. It requires 60 days' written notice from 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), and makes a violating employer liable for back pay and benefits (29 U.S.C. 2101-2102, 2104). An employer can owe under both; the comparison is on our severance pay laws guide.

Severance and Wisconsin unemployment benefits

Severance can reduce or block Wisconsin unemployment benefits, and the turning point is whether the payment is allocated to specific weeks. Wis. Stat. 108.05(5) says dismissal or termination pay is "treated as wages for a given week only if it has by the close of that week become definitely allocated and payable to the employee for that week," the employee has had due notice of it, and it is allocated at not less than the employee's approximate full weekly wage rate or on another reasonable basis.

Once termination pay counts as wages for a week, these rules apply:

• More than $500 bars the week. You are ineligible for a week in which you receive, from one or more employers, more than $500 in combined termination pay, wages for work in that week, sick, holiday, vacation, bonus or back pay (Wis. Stat. 108.05(3)(dm)). DWD's benefit-reductions page states the same $500 rule.
• 32 hours of pay bars the week. You are ineligible for any week in which termination, holiday, vacation or sick pay treated as wages covers 32 or more hours (108.05(3)(c)3.).
• Smaller amounts reduce the check. Wages in a week reduce the weekly benefit, with the first $30 disregarded and 67% of the rest subtracted (108.05(3)(a)).
• Report it. Concealing termination pay makes a claimant ineligible (108.05(3)(d)).

We found no DWD guidance spelling out how a lump sum that is not allocated to any week is treated, so this page does not generalize; report every payment and let DWD decide. Benefit amounts and filing are covered in Wisconsin unemployment benefits.

What a Wisconsin severance agreement can ask you to give up

Most severance agreements trade money for a release of claims. Wisconsin law sets a few limits.

You cannot contract out of the wage-payment section. Wis. Stat. 109.03(5) says "no employer may by special contract with employees or by any other means secure exemption from this section." Since that section governs paying wages, and promised severance is wages, an agreement cannot remove the employer's duty to pay it. We found no Wisconsin statute or decision on whether a signed release bars a later claim for severance already owed, so this page does not answer that.

You cannot give up unemployment benefits. A release in a severance agreement cannot take away your right to unemployment benefits. Wis. Stat. 108.12 says "No agreement by an employee to waive the employee's right to benefits or any other rights under this chapter shall be valid," and Wis. Stat. 108.24(3)(a)3.b. prohibits anyone from trying, by a promise of reemployment, a threat or any other means, to induce an employee to waive any right under the unemployment chapter.

Releases of state discrimination claims. The Labor and Industry Review Commission, which reviews Wisconsin Fair Employment Act cases, tests a release of those claims in a severance agreement by whether it was knowing and voluntary under the totality of the circumstances, according to its ER Digest. Factors include the employee's education and experience, the time given to review, the employee's role in setting the terms, the clarity of the agreement, whether the employee had counsel, and whether the employee got something beyond what was already owed. These are commission decisions, not a statute.

We found no Wisconsin statute that sets a review or revocation period for a private severance agreement, or that limits nondisclosure or non-disparagement terms in one. Our search covered chapter 109 and parts of chapter 111, not every chapter, so this page does not say no such law exists.

Federal limits apply in Wisconsin, and 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 in a group layoff) and 7 days to revoke it after signing (29 U.S.C. 626(f)).
• Sexual harassment and assault. A nondisclosure or non-disparagement clause agreed to before a dispute arises cannot be enforced in court in a sexual assault or sexual harassment dispute (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 rights under the National Labor Relations Act. The NLRB General Counsel said in memo GC 26-04 (August 26, 2026) that she is arguing to overrule it in an open case, so it remains Board law until the Board acts.

Non-compete terms in a severance agreement

Wisconsin enforces a non-compete only if its restrictions are reasonably necessary to protect the employer, and a covenant with an unreasonable restraint is void as a whole rather than trimmed (Wis. Stat. 103.465). The Wisconsin Supreme Court has applied the same test to a plan term that took away benefits from employees who compete (Holsen v. Marshall & Ilsley Bank, 1971).

Two Wisconsin rules are worth keeping in mind when you read an offer. Because severance is wages once agreed, get the promise in writing and keep the offer, each revision and any plan or handbook policy. And because Wis. Stat. 108.05(5) works week by week, how the agreement allocates the payment can affect your unemployment benefits.

Recent changes

2025 Wisconsin Act 139, enacted March 27, 2026 and published March 28, 2026, amended Wis. Stat. 109.07(1m)(a) only to update a federal Workforce Innovation and Opportunity Act cross-reference. It did not change the plant-closing thresholds, the 60-day notice period or the employer's liability. We found no 2025-2026 bill that created a severance requirement or substantively changed 109.01(3), 109.03, 108.05(5) or 109.07, and we did not review 2027 prefiled bills.

Related

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

Disclaimer: This article provides general legal information about Wisconsin severance pay law (Wis. Stat. chapter 109, including the business closing and mass layoff law in 109.07, and the unemployment rules in Wis. Stat. 108.05) and the federal laws that apply in Wisconsin. It is not legal advice. The information was verified on October 8, 2026. For advice about your situation, contact the Wisconsin Department of Workforce Development, a legal aid office, or a lawyer licensed in Wisconsin.

Last updated: October 8, 2026.

Frequently Asked Questions

Is severance pay required by law in Wisconsin?

No Wisconsin statute we reviewed requires an employer to offer severance. Once severance is agreed upon or is an established employer policy, Wis. Stat. 109.01(3) treats it as wages the employer must pay.

Is severance considered wages in Wisconsin?

Yes, when it is payable. Wis. Stat. 109.01(3) lists "severance pay or dismissal pay" in the definition of wages, so promised severance can be claimed through the Department of Workforce Development like other unpaid wages. Chapter 109 does not cover officers, owners, or people employed in a managerial, executive or commissioned sales capacity (109.01(1r)), so those workers generally rely on their agreement instead.

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

Wis. Stat. 109.09(1) lets DWD take a wage claim filed no later than 2 years after the wages are due. You can also sue directly without filing with DWD first (109.03(5)), but a wage lawsuit generally must be filed within 2 years after the claim accrues (893.44(1)), and a court action on a DWD claim within 2 years after the DWD filing (893.44(2)).

Can I get unemployment in Wisconsin if I received severance?

It depends on the week. Termination pay counts as wages for a week once it is definitely allocated and payable for that week (Wis. Stat. 108.05(5)), and more than $500 of combined termination and other pay in a week bars benefits for that week (108.05(3)(dm)).

Does Wisconsin have a state WARN Act?

Yes. Wis. Stat. 109.07 requires employers of 50 or more persons in Wisconsin to give 60 days' written notice of a business closing affecting 25 or more employees or a covered mass layoff, and makes them liable for pay and lost benefits for the days notice was late.

How do I file a Wisconsin plant-closing notice claim?

File with the Department of Workforce Development no later than 300 days after the closing or layoff (Wis. Stat. 109.07(4)). DWD investigates and can refer the claim to the Department of Justice before an employee may sue.

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

We found no Wisconsin 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-discrimination claims (45 in a group layoff) and 7 days to revoke it after signing (29 U.S.C. 626(f)).