Rivian Layoffs: The Full Severance Package Offered to Over 600 Affected Employees

Rivian’s Latest Restructuring: Details of the Severance Package for Affected Employees

In its continued effort to streamline operations and achieve profitability, electric vehicle manufacturer Rivian Automotive has initiated a new round of layoffs in 2025, affecting more than 600 employees. As the company navigates a challenging economic landscape and intense competition in the EV sector, the focus has shifted sharply toward efficiency.

For those affected by this recent workforce reduction, Rivian has structured a comprehensive severance package designed to provide a transition period. The most immediate and notable component of this package is the placement of laid-off staff on 60 days of paid administrative leave.

This measure, detailed in internal documents, is a common practice among large U.S. employers and serves a critical legal function, primarily related to compliance with the federal Worker Adjustment and Retraining Notification (WARN) Act. The WARN Act typically mandates that companies provide 60 days’ notice for mass layoffs. By placing employees on paid leave during this period, Rivian ensures compliance while giving employees time to prepare for their transition.

Core Components of the Employee Transition Offer

Following the mandatory 60-day paid administrative leave, the severance package officially kicks in. Rivian’s offering is designed to cover financial compensation, health benefits, and career support, aiming to ease the burden of job displacement for the hundreds of affected workers.

Financial and Benefits Coverage

The severance package includes several key financial components, allowing employees a cushion beyond the initial two months of paid leave:

• Severance Pay: Employees will receive an additional payout equivalent to two months of their base salary. This payment is separate from and subsequent to the 60 days of paid administrative leave.
• Health Benefits Continuation (COBRA): Rivian is covering the full cost of COBRA health insurance premiums for a defined period, typically three months. This ensures continuity of medical coverage immediately following the end of their employment.
• Accrued Paid Time Off (PTO): All unused and accrued paid time off will be paid out to the employee in their final paycheck, in accordance with state and local laws.

Equity Treatment: Handling RSUs

One of the most complex aspects of tech and automotive startup compensation is the treatment of Restricted Stock Units (RSUs). Rivian has provided specific guidance on how vested equity will be handled for the departing employees:

“Employees who have vested equity will retain the ability to exercise their stock options for a period of time following their official termination date. The company is committed to ensuring that vested RSUs are handled clearly and fairly, allowing employees to realize the value of their earned compensation.”

While the exact exercise window can vary based on the original grant agreement, the standard practice is to allow a window (often 90 days) for employees to exercise vested shares before they expire.

Strategic Context: Why the 60-Day Paid Leave?

The decision to place employees on a 60-day paid administrative leave before the official termination date is not merely a gesture of goodwill; it is a calculated business move rooted in regulatory compliance, specifically the WARN Act.

The WARN Act Requirement

The WARN Act requires employers with 100 or more full-time employees to provide 60 calendar days advance notice of a plant closing or mass layoff. A mass layoff is defined as a reduction in force that results in an employment loss for 50 or more employees at a single site of employment during a 30-day period, provided those 50 represent at least 33% of the workforce, or 500 employees regardless of percentage.

By utilizing the paid administrative leave period, Rivian achieves two goals simultaneously:

1. Compliance: It satisfies the 60-day notice requirement, avoiding potential fines and lawsuits associated with non-compliance.
2. Employee Transition: It allows employees to retain their benefits and salary for two months while actively searching for new employment, mitigating the immediate financial shock of the layoff.

This strategy is particularly prevalent in the tech and automotive sectors, where large-scale restructurings are common, and maintaining legal compliance is paramount.

Rivian’s Ongoing Cost-Cutting Strategy

This 2025 layoff is not an isolated event but rather the latest step in Rivian’s multi-year strategy to reduce operating expenses and move toward sustainable profitability. Since its highly publicized IPO, Rivian has faced significant challenges, including supply chain disruptions, high material costs, and the difficulty of scaling production of its R1T, R1S, and commercial delivery vehicles.

Previous rounds of layoffs have targeted non-manufacturing roles, focusing on optimizing corporate functions and reducing overhead. The current round signals a continued commitment from CEO RJ Scaringe and the leadership team to prioritize efficiency over rapid expansion. The company is heavily focused on the upcoming launch of its more affordable R2 platform, which is seen as crucial for achieving mass-market appeal and financial stability.

Industry Implications

Rivian’s actions reflect a broader trend across the EV industry in 2025. As interest rates remain elevated and consumer demand for high-end EVs softens, companies are shifting from a ‘growth at all costs’ mentality to a ‘profitability first’ approach. Competitors are also undergoing similar adjustments, making efficiency the new metric of success in the highly competitive automotive landscape.

Key Takeaways

For employees and industry watchers, the key elements of Rivian’s severance package and restructuring effort are clear:

• Scope: Over 600 employees were affected in the latest workforce reduction.
• Immediate Status: Employees are placed on 60 days of paid administrative leave to comply with the WARN Act.
• Severance Pay: An additional two months of base salary is provided after the leave period ends.
• Health Coverage: Rivian covers three months of COBRA premiums.
• Equity: Vested stock options and RSUs remain exercisable, though employees must act within a defined post-termination window.
• Context: The layoffs underscore Rivian’s aggressive push for cost reduction ahead of the critical R2 platform launch.

What’s Next for Rivian and Affected Employees

For the hundreds of individuals departing Rivian, the severance package offers a necessary financial bridge, coupled with outplacement services to assist in the job search. The 60-day paid leave provides valuable time to secure new roles without immediate income loss.

For Rivian, the success of these cost-cutting measures will be judged by their impact on the bottom line. The company must demonstrate to investors that it can maintain its production targets—particularly for the R1 vehicles and its Amazon commercial vans—while successfully reducing its burn rate. The market remains highly focused on the development timeline and pricing strategy for the R2 vehicle, which is essential for Rivian’s long-term viability in the mainstream EV market.