A severance agreement can exchange additional compensation or benefits for promises made by a departing employee, often including a release of legal claims. The amount offered is important, but the rights being released, deadlines, confidentiality language, benefit terms, and post-employment restrictions deserve equal attention.
A Severance Offer Is a Contract
Federal employment law does not create one universal severance payment owed whenever a job ends. Rights to severance may instead arise from an employment agreement, benefit plan, employer policy, collective bargaining agreement, or another applicable legal obligation.
Before signing, identify what the employee would receive without the agreement and what additional consideration is being offered for the release. Broader employment law notes can help frame questions, but the actual document controls the contractual promises being proposed.
Waivers of Employment Claims Have Limits
The EEOC explains that waivers of discrimination claims generally must be knowing and voluntary. A valid waiver should provide consideration beyond something the worker is already entitled to receive, and it cannot validly waive claims that arise after execution.
Employees should compare the proposed release against termination notices, performance records, complaints, pay documents, and other relevant evidence. Keeping these materials together with claim organization material can make it easier to see what rights may be affected.
| Term to Review | What to Identify | Possible Concern |
|---|---|---|
| Payment | Amount and timing | Conditions on payment |
| Release | Claims being waived | Language may be broad |
| Benefits | Insurance or other benefits | End dates may differ |
| Restrictions | Confidentiality or competition | Future work may be affected |
Special Rules Protect Some Workers Age 40 or Older
The Older Workers Benefit Protection Act imposes specific requirements for waivers of claims under the Age Discrimination in Employment Act. Individual agreements generally must provide at least 21 days for consideration and at least seven days to revoke after signing; certain group termination programs generally require at least 45 days plus additional disclosures.
The agreement must also advise the individual in writing to consult an attorney before signing and must specifically address ADEA rights. EEOC age-discrimination waiver guidance Questions about enforcing or challenging such terms may later involve review and appeal topics.
Mistakes Employees Make Before Signing
A common mistake is reading only the severance dollar amount. Releases may address discrimination, contract disputes, compensation issues, cooperation duties, return of property, confidentiality, references, nonsolicitation, or other post-employment obligations.
Another mistake is assuming a release prevents every interaction with a government agency. The EEOC states that an agreement cannot lawfully prevent a person from filing an EEOC charge or participating in an EEOC investigation or proceeding.
When Legal Advice May Be Worth Getting
Consider prompt review when the agreement contains a broad release, restrictive covenant, repayment clause, disputed compensation, unusual confidentiality language, or facts suggesting discrimination or retaliation. Review can be particularly valuable before an acceptance deadline expires.
Do not rely on memory when reconstructing the employment relationship. Preserve the proposed agreement, original employment contract, amendments, policies, termination notice, payroll information, and relevant workplace communications.
Frequently Asked Questions
Must an employee sign a severance agreement immediately?
The answer depends on the agreement and applicable law. Certain ADEA waivers for workers age 40 or older have statutory consideration periods, while other severance offers may operate under different deadlines.
Can a severance agreement waive future discrimination claims?
A waiver cannot validly release discrimination claims based on events that occur after the agreement is signed.
Can someone file an EEOC charge after signing a severance agreement?
Yes. The EEOC states that an agreement cannot prevent an individual from filing a discrimination charge or participating in an EEOC proceeding, although a valid release may affect private remedies for released claims.
Know What You Are Trading Away
Severance should be evaluated as an exchange, not simply as a final paycheck bonus. Identify the extra value being offered, every right being released, every continuing obligation, and the deadline before signing a document that may shape what happens long after employment ends.
This article provides general legal information and is not a substitute for advice from a qualified attorney about a specific severance agreement.