Under Maine severance pay law, employers with 100 or more workers at a facility must pay severance when they close, relocate at least 100 miles away, or carry out a qualifying mass layoff. Eligible workers get one week’s average pay for each year they’ve been at the facility, provided they’ve been there at least three years. The rule is 26 M.R.S. ยง 625-B, and the details on who counts, how pay is figured, and what to do when an employer ignores it are worth knowing before you sign anything.
Who Qualifies
Two things have to line up: the facility has to be covered, and you have to be an eligible employee.
A “covered establishment” is any Maine facility that employed 100 or more people at any point in the previous 12 months. Severance is triggered when one of three things happens at that facility:
- A closing, meaning the employer substantially ceases operations.
- A relocation of all or nearly all operations to a site at least 100 miles away.
- A mass layoff lasting at least six months that affects either 33% of the workforce and at least 50 people, or 500 or more employees.
To be an eligible employee, you need all three of the following: at least three years of continuous employment at that facility (time on a leave of absence counts), no termination for cause, and you haven’t accepted a job at another location the same employer runs or stayed on at the same facility in a different role.1Maine State Legislature. Maine Code 26-625-B – Severance Pay Due to Closing, Substantial Shutdown or Relocation of a Covered Establishment
How Much You’re Owed
The formula is one week’s pay for every year at the covered establishment, with partial pay for any partial year. The number that trips people up is “one week’s pay,” because it isn’t your hourly rate times 40.
Maine defines a week’s pay as your total gross earnings over the 12 months before the closing or layoff, divided by the number of weeks you actually received earnings in that period. Gross earnings pull in a lot: regular pay, overtime, shift differentials, premiums, holiday pay, vacation pay, sick pay, jury duty pay, and funeral leave. The only category left out is money from third-party benefit programs such as disability insurance.1Maine State Legislature. Maine Code 26-625-B – Severance Pay Due to Closing, Substantial Shutdown or Relocation of a Covered Establishment
If you regularly worked overtime or earned shift premiums, that history is baked into the weekly figure, and the severance can run meaningfully higher than base pay would suggest. Payment has to arrive within one regular pay period after your last full day of work, and it comes on top of any final wages owed.
When No Severance Is Owed
The statute spells out several situations where the obligation doesn’t apply, even at a covered facility:
- The closing was caused by a physical calamity (such as a natural disaster or fire) or a final government agency order.
- You’re already covered by a contract that provides severance equal to or greater than the statute requires. The employer must show the Director of the Bureau of Labor Standards that the contract actually delivers a greater benefit.
- The facility filed for Chapter 11 reorganization. If the case later converts to Chapter 7 liquidation, the exemption no longer applies.
- You hadn’t hit three years of service.
- You accepted a position at the employer’s new or other location.
The employer carries the burden of proof on any of these.1Maine State Legislature. Maine Code 26-625-B – Severance Pay Due to Closing, Substantial Shutdown or Relocation of a Covered Establishment
Notice You Should Have Received
Separate from the severance itself, the law requires advance written notice. For a closing or relocation, the employer must notify the Director of the Bureau of Labor Standards, the affected employees, and the municipal officers of the host town at least 90 days ahead. The director can waive the notice to employees and the town, but not the notice to the director.1Maine State Legislature. Maine Code 26-625-B – Severance Pay Due to Closing, Substantial Shutdown or Relocation of a Covered Establishment
Mass layoffs run on a different clock. Notice to the director is required as far in advance as practicable and no later than seven days after the layoff, with the expected duration and whether it’s temporary or indefinite. A notice violation carries a civil penalty of up to $500 per day. The penalty doesn’t apply if the closing was caused by physical calamity, a government order, or genuinely unforeseen circumstances.1Maine State Legislature. Maine Code 26-625-B – Severance Pay Due to Closing, Substantial Shutdown or Relocation of a Covered Establishment
How This Differs From the Federal WARN Act
Maine’s law sits alongside the federal Worker Adjustment and Retraining Notification Act, and the two shouldn’t be confused. Federal WARN applies to employers with 100 or more full-time employees and requires 60 days’ written notice before a covered plant closing or mass layoff.2GovInfo. 29 USC 2102 – Notice Required Before Plant Closings and Mass Layoffs A WARN violation gets you up to 60 days of back pay and benefits. That’s a notice remedy, not a severance remedy.
Maine’s statute gives you actual severance tied to years of service, which for a long-tenured worker is often far more than 60 days of pay. The two laws can apply to the same event, and an employer that botches notice can face consequences under both.
If Your Employer Doesn’t Pay
You have two routes. The Director of the Bureau of Labor Standards has authority to supervise severance payments and can sue in court to recover what’s owed. You can also file a civil suit yourself in state or federal court, and a union can sue on behalf of its members. The statute requires the court to award reasonable attorney’s fees to the employee on top of any unpaid severance recovered, which takes most of the financial risk out of bringing a case.1Maine State Legislature. Maine Code 26-625-B – Severance Pay Due to Closing, Substantial Shutdown or Relocation of a Covered Establishment
Taxes on Your Severance Check
Severance is taxable income. Federal rules treat it as supplemental wages, so if your employer pays it separately from regular wages, federal income tax is withheld at a flat 22%.3Internal Revenue Service. Publication 15 (2026), (Circular E), Employers Tax Guide Social Security, Medicare, and Maine state income tax come out as well.
Because the payment often covers many weeks at once, the withholding can look lopsided, and a large check paid late in the year can push your total income into a higher bracket. If that’s your situation, it’s worth looking at whether your year-end withholding will actually cover what you owe.
Health Coverage After Your Last Day
If you lose employer-sponsored health insurance from a company with 20 or more employees, you’re generally eligible for COBRA continuation coverage. COBRA lets you stay on the same group plan for up to 18 months, but you pay the full premium yourself (both the employee and employer shares) plus a 2% administrative fee.4Centers for Medicare & Medicaid Services. COBRA Continuation Coverage
Severance does not extend your employer-paid coverage. The COBRA clock starts the day your employment ends, regardless of how many weeks of severance you’re getting. Family-coverage COBRA premiums can easily top $1,500 a month, which is often the single biggest surprise in the whole transition.