Division VII · Transactions and Workforce Change
Part 26. Severance, WARN, and Workforce Restructuring
This Part covers any workforce reduction, facility closure, furlough, hours reduction, or voluntary separation window, and for severance arrangements generally: the ERISA plan-status question under Fort Halifax, the 29 C.F.R. §2510.3-2(b) welfare-versus-pension safe harbor (the 2×/24-month trap, whose failure loses the safe harbor and ordinarily produces a pension plan with no realistic compliance path), window programs in both their cash-severance and qualified-plan early-retirement forms, severance plan documentation and ERISA §510 selection exposure, and OWBPA releases including the group-program decisional-unit disclosure; the federal WARN Act and the state mini-WARN overlay, including single site of employment and its unresolved application to fully remote employees; the §409A separation-pay exemptions in depth (short-term deferral, the two-times/two-year involuntary separation exception, collectively bargained and foreign separation pay, and the reimbursement and limited-payment exemptions that stack), involuntariness and the good reason safe harbor, the six-month delay, and the release-timing trap; the §457(e)(11) bona fide severance pay plan exclusion; severance employment taxation (Quality Stores and the surviving SUB-pay exception); and the benefit-plan consequences a restructuring triggers across the portfolio.
Chapters
Chapter 1. Severance Plan Status, Window Programs, and Design
This chapter covers the two status questions every severance arrangement raises — is it an ERISA plan at all (the Fort Halifax ongoing-administrative-scheme test), and if it is, is it a welfare plan or has it fallen into pension plan status under 29 C.F.R. §2510.3-2(b) — together with window programs (both severance windows and qualified-plan early retirement windows), severance plan documentation and administration, amendment and §510 exposure, and the release that severance is almost always conditioned on (OWBPA and what cannot be waived).
Law stated as of October 3, 2026
Chapter 2. The WARN Act and State Mini-WARN Laws
This chapter covers the federal Worker Adjustment and Retraining Notification Act (29 U.S.C. §§2101–2109; 20 C.F.R. Part 639) — coverage, the two triggering events, employment loss, the single site of employment question and its unresolved application to fully remote workers, notice content and delivery, the three exceptions, the sale-of-business and 90-day aggregation rules, and the liability and remedy structure — together with the state mini-WARN overlay and how WARN pay interacts with severance and releases.
Law stated as of October 3, 2026
Chapter 3. Severance under §409A and §457, and Severance Taxation
This chapter covers, in depth, the §409A exemptions that severance arrangements actually run on — the short-term deferral rule and the five separation-pay exemptions of Treas. Reg. §1.409A-1(b)(9), including the two-times/two-year involuntary separation exception with its current-year dollar figures, the collectively bargained and foreign-law exemptions, and the reimbursement and limited-payment exemptions — together with what counts as an involuntary separation, the good reason safe harbor, window programs, the six-month delay for specified employees, the release-timing trap, the §457(e)(11) bona fide severance pay plan exclusion for governmental and tax-exempt employers, and the employment taxation of severance and SUB pay.
Law stated as of October 3, 2026
Chapter 4. Workforce Restructuring: Benefit Plan Consequences
This chapter is a restructuring overlay: it identifies the benefit-plan consequences that a reduction in force, facility closure, furlough, or divestiture triggers across the plan portfolio, states the operative rule and the trigger to watch, and points to the Part that covers the substantive analysis.
Law stated as of October 3, 2026
Also in this Part
- Issues to watchSubscribers
- Practice toolsSubscribers
- Authorities cited in this PartSubscribers