Being asked to sign a severance agreement can feel like a shock—especially if the end of your employment is unexpected. Employers often present these agreements during layoffs, restructuring, or after terminating an employee, and they may come with a time limit for you to sign. While severance packages might appear straightforward, they are legally binding contracts that can affect your financial future and legal rights.
If you’ve been presented with a severance agreement, you may be wondering: Should I just sign it? Is it negotiable? What happens if I don’t agree with the terms? These are important questions, and the truth is that having a lawyer review the agreement can help ensure that your best interests are protected.
In this article, we’ll explore what a severance agreement typically includes, why legal guidance is valuable, and how the right attorney can help you secure a better deal.
What Is a Severance Agreement?
A severance agreement is a contract between an employer and an employee that offers an outline of the terms of employment, specifically regarding the employee’s exit from the company. While not legally required in most situations, severance agreements are common in layoffs and some firings. In exchange for a financial payout or continued benefits, the employee usually agrees not to sue the employer and may also waive other rights.
Common Elements in Severance Agreements:
- Severance pay amount and payment schedule
- Health insurance continuation (COBRA or employer-sponsored)
- Non-disparagement or confidentiality clauses
- Non-compete or non-solicitation provisions
- A release of claims against the employer
- Agreements related to stock options or retirement benefits
Because of these broad terms, a severance agreement may have implications far beyond your final paycheck. That’s why careful review and negotiation are so important.
Why You Shouldn't Automatically Sign a Severance Agreement
Employers typically draft severance agreements to protect their own interests. By signing, you may be giving up the right to sue for wrongful termination, discrimination, unpaid wages, or harassment—even if those claims are valid.
Many agreements include restrictive clauses that could limit your future job opportunities, such as non-compete or non-solicitation clauses. You could also be prevented from speaking publicly or privately about your experience, even if you were mistreated.
Once you sign the agreement, it’s extremely difficult to take legal action later—even if new information comes to light. This is why consulting a lawyer before signing is not just wise, but often essential.
How a Lawyer Can Help With Severance Negotiations
An experienced employment attorney can guide you through the negotiation process and help you understand what you’re agreeing to. Here’s how:
1. Reviewing the Agreement for Unfair or Risky Clauses
An attorney will look for red flags—terms that are overly broad, unreasonable, or unenforceable. For example, some non-compete clauses are written so broadly that they could keep you from working in your field for months or years.
2. Evaluating Potential Legal Claims You May Be Waiving
Before waiving your rights to pursue legal action, a lawyer can assess whether you might have grounds for a wrongful termination, discrimination, or unpaid wage claim. If you do, this could give you leverage in negotiations.
3. Negotiating for a Better Package
Your attorney may be able to negotiate a higher payout, extended health benefits, a favorable reference, or removal of restrictive covenants. Severance agreements are often negotiable—even if the employer says otherwise.
4. Advising on Tax Implications
Severance pay is considered taxable income. A lawyer may work with a tax advisor to help you understand how the payout could affect your financial situation and whether a structured payment might benefit you.
5. Protecting Your Professional Reputation
Non-disparagement clauses or gag orders could impact your ability to speak about your experience or advocate for yourself in future job interviews. A lawyer can push back on overly restrictive language that could harm your reputation or career.
Are There Legal Protections for Employees?
Yes. Certain federal and state laws apply to severance agreements. For example, under the Older Workers Benefit Protection Act (OWBPA), employees over 40 must be given at least 21 days to review a severance offer and 7 days to revoke their signature after signing. In cases involving group layoffs, the time period may be longer.
Additionally, employers cannot require you to waive certain rights, such as the right to report unlawful activity to government agencies.
Call Brandon J. Broderick For Legal Help
Before signing away your rights or accepting a severance package that doesn’t reflect your value, speak with a lawyer who can help you understand the full picture. At Brandon J. Broderick, Attorney at Law, we assist employees in reviewing and negotiating fair severance agreements.
We know how to spot unfair terms, advocate for your interests, and protect your future career. Whether you’re being laid off, resigning under pressure, or simply want a second opinion, we’re here to help.
Contact us today for a confidential consultation.