Short Answer: Not required by federal law; calculation and timing depend on company policy or employment contract.
Full Answer: The Fair Labor Standards Act (FLSA) does not mandate severance pay; its calculation and payment depend on employer policies, employment contracts, or collective bargaining agreements. Common methods include:
Length of Service: One week’s pay for each year worked.
Flat Amount: A pre-determined sum specified in a contract or policy.
Based on Salary: A percentage of the employee’s salary for a specific period.
Severance is typically due upon termination, as outlined in the policy or contract. If the employer promises severance, failure to pay may be a breach of contract. Some states have specific requirements, so check local laws.
General Federal Standard: Severance pay is not federally mandated but must be paid if contractually obligated.
Link to a legislative resource from trusted sources: U.S. Department of Labor - Severance Pay