Severance Pay in Louisiana: Are You Entitled?

Federal law does not mandate severance pay for any private sector employer. The Worker Adjustment and Retraining Notification (WARN) Act, 29 U.S.C. § 2101 et seq., requires employers with 50 or more employees to provide 60 days' written notice before a plant closing or mass layoff affecting 50 or more employees. WARN Act covers only the notice requirement, not severance itself. Employers who fail to provide the 60-day notice must pay affected employees back pay and benefits for the period of notice not given, up to 60 days. The Department of Labor (DOL) and state labor agencies enforce the WARN Act. The Age Discrimination in Employment Act (ADEA) prohibits using age as a factor in severance decisions. Title VII of the Civil Rights Act of 1964 prohibits discriminatory severance practices based on race, color, religion, sex, or national origin. The Equal Employment Opportunity Commission (EEOC) enforces these anti-discrimination rules. Some collective bargaining agreements require severance, but these are negotiated union contracts, not legal requirements.

At the federal level, if an employer offers severance as a condition of signing a release of legal claims, the release must be knowing and voluntary and must comply with the Older Workers Benefit Protection Act (OWBPA) if the employee is 40 or older. The employer must give the employee 21 days (or 45 days in group layoffs) to consider the agreement and 7 days to revoke it after signing.

Louisiana has no statutory requirement that employers pay severance upon termination. Louisiana Revised Statutes § 23:631 requires employers to pay all earned wages and accrued time off at the time of separation, but this is not severance—it is compensation already earned. Louisiana Civil Code Article 1758 establishes that employment relationships in Louisiana are at-will absent a written contract specifying otherwise, meaning either the employer or employee may terminate the relationship at any time without cause and without notice (except as required by specific laws like the WARN Act).

Severance is discretionary in Louisiana and governed by three sources: (1) an explicit written severance policy adopted by the employer, (2) an individual employment contract promising severance, or (3) a collective bargaining agreement negotiated with a union. If an employer has published a severance policy in an employee handbook or on a website and has applied it consistently, Louisiana courts may find the employer bound to honor it as an implied contract term. However, most Louisiana employers reserve the right to modify or terminate severance policies unilaterally, and unless the handbook expressly says the policy is binding, courts often treat it as an expression of intent, not a binding commitment.

Louisiana law does not recognize any categorical entitlement to severance based on length of service, job category, or reason for termination. Employers are not required to offer severance in layoffs, plant closings, or reductions in force. The only exception is the WARN Act requirement for 60-day notice (not severance pay) in mass layoffs involving 50 or more employees. Louisiana employers may condition severance on the employee signing a severance agreement that includes non-competition clauses, confidentiality provisions, non-disparagement clauses, or releases of legal claims. Such agreements are enforceable if supported by consideration (severance payment) and are not grossly oppressive or unconscionable.

Louisiana's at-will employment rule has limited exceptions that do not affect severance entitlement but protect employees from wrongful termination:

(1) Public Policy Exception: An employer cannot terminate an employee in violation of a clear public policy. For example, firing an employee for refusing to commit an illegal act, serving on jury duty, or filing a workers' compensation claim is wrongful termination, but this does not entitle the employee to severance—it only allows a wrongful termination lawsuit for damages. The public policy exception is narrowly applied in Louisiana and requires proof that the discharge was the sole proximate cause of the injury.

(2) Implied Contract Exception: If an employment handbook, oral promise, or conduct creates a reasonable expectation of continued employment or severance benefits, Louisiana courts may enforce it. However, disclaimers in handbooks (e.g., "This policy does not create an employment contract and is subject to change at any time") typically negate any implied contract.

(3) Whistleblower Protections: Louisiana Revised Statutes § 23:967 et seq. protects employees reporting violations of law to public agencies. Terminating an employee for protected whistleblowing is unlawful, but again, the remedy is damages for wrongful termination, not automatic severance.

(4) Union and Collective Bargaining Carve-Out: If an employee is covered by a collective bargaining agreement, the agreement controls and may require severance even though state law does not. Louisiana strongly protects union rights and enforces negotiated severance provisions.

(5) Federal Anti-Discrimination Laws: If severance is offered but is withheld because of the employee's age (40+), race, sex, disability, or other protected status, that violates the ADEA, Title VII, or the ADA. However, the employer need not offer severance at all; it can only be illegal if it is offered discriminatorily.

Step 1: Document the separation and severance offer (or lack thereof). Obtain copies of any written job offer, employment agreement, employee handbook, severance policy, and the actual severance agreement if one was offered. Document the date of termination, the reason given by the employer, and whether the employer mentioned severance. If the employer verbally promised severance, write down the date, who said it, and what was said. Save emails, text messages, or letters from the employer about severance. Keep records of your job performance, tenure, and how similarly situated employees were treated at termination.

Step 2: Review whether you have a contractual right to severance. Read any severance agreement offered carefully before signing. If you signed one, verify the amount, timing of payment, and any conditions (release of claims, confidentiality, non-compete). If you have not been offered severance but believe you are entitled to it, check your employment contract and employee handbook for severance provisions. If the handbook says severance will be paid "in the event of termination" or similar language and does not include a clear disclaimer, you may have a claim.

Step 3: If severance was promised but not paid, send the employer a written demand (email or certified letter) requesting severance within 14 days. State the specific promise (contract clause, handbook provision, or oral agreement) and the amount owed. Request proof of payment. Keep a copy of your demand and any response.

Step 4: If the employer refuses to pay promised severance, file a wage claim with the Louisiana Department of Labor and Workforce Development, Office of Worker's Compensation Administration, Wage and Hour Section. Louisiana Revised Statutes § 23:631 covers "wages" broadly, and some Louisiana courts have found unpaid severance to be wages. Go to www.ldol.state.la.us or call (225) 342-3111. File within one year of the termination date (statute of limitations for wage claims in Louisiana). Alternatively, consult an employment attorney to determine if you have a claim for breach of contract or wrongful termination.

Step 5: If discrimination played a role in the severance denial (e.g., you were offered severance but it was withdrawn because of your age or race), file an EEOC charge within 180 days of the violation. The EEOC New Orleans field office can be reached at (504) 589-2329 or www.eeoc.gov. If the WARN Act was violated (you received less than 60 days' notice in a mass layoff), file a complaint with the U.S. Department of Labor Wage and Hour Division at (855) 342-8352 or www.dol.gov/agencies/whd within two years.