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elaws - employment laws assistance for workers and small businesses - Fair Labor Standards Act Advisor

How is severance pay calculated and when is it due?

The Fair Labor Standards Act (FLSA) requires payment of at least the federal minimum wage for all hours worked in a workweek and time and one-half an employee's regular rate for time worked over 40 hours in a workweek. There is no requirement in the FLSA for severance pay. Severance pay is a matter of agreement between an employer and an employee (or the employee's representative).

The Employee Benefits Security Administration (EBSA) may be able to assist an employee who did not receive severance pay required in his or her employment contract.