Understanding the Severance Agreement

What Is a Severance Agreement?

A severance agreement is a legal contract between you and your employer. The employer usually offers additional pay, benefits, or something else of value in exchange for your signature and the promises included in the agreement.

Federal wage law generally does not require an employer to provide severance pay. However, an employment contract, union agreement, severance plan, company policy, or applicable state law may create an obligation. The U.S. Department of Labor explains that severance is generally a matter of agreement between an employer and an employee.

A severance agreement is different from ordinary termination paperwork. Final wages, approved expenses, vested retirement benefits, and certain other compensation may already belong to you whether you sign the agreement or not. The severance offer is the additional value the employer is offering in exchange for your agreement.

In return, you may be asked to release legal claims or accept restrictions and responsibilities that continue after your job ends. If you decline to sign, you may lose the additional severance offer, but that does not automatically erase money or benefits the employer already owes you.

The exact rules depend on the agreement, the employer’s existing plans and policies, and the laws that apply where you work. That is why the first job is to separate what you are already owed from what you receive only if you sign.

1. What Is the Signing Deadline?

Find the exact date and time your signed agreement must be received. The deadline may appear near the beginning of the agreement, in the signature section, or under a heading such as “Acceptance,” “Consideration Period,” or “Execution.”

Confirm:

• The calendar date and time, including the time zone
• Whether the agreement must be received by the deadline or merely sent by then
• Who must receive it
• Whether it must be submitted by email, electronic signature, mail, or another method
• Whether any attachments or additional forms must be returned with it

Do not rely on a verbal deadline. If the agreement is unclear or HR gave you different information, ask for the deadline and delivery instructions in writing.

You can ask for more time to review the agreement, but the employer may not agree. Unless you receive a written extension, assume the original deadline still applies.

A signing deadline and a revocation period are not the same thing. The signing deadline is your last day to accept the offer. A revocation period, when one applies, is the time allowed to cancel after signing. Do not assume you have the right to revoke an agreement unless the agreement or applicable law provides one.

Workers age 40 or older who are asked to waive federal age-discrimination claims may be entitled to a minimum period to consider the agreement. Those rules are explained in Question 10.

Once you confirm the deadline, put it on your calendar with a reminder several days earlier. Waiting until the final hour leaves no room for missing documents, unanswered questions, technical problems, or an attorney who cannot review a contract at warp speed.

2. What Will You Receive for Signing?

Identify everything the employer is offering specifically in exchange for accepting the agreement. This is sometimes called the consideration, meaning something of value you would not otherwise receive.

The offer may include:

• Severance pay
• Continued salary for a set period
• Continued medical, dental, vision, or prescription coverage
• Payment or reimbursement of COBRA premiums
• Additional retirement-plan contributions or vesting
• Extended time to exercise stock options
• Outplacement or career-transition services
• An agreed reference or employment-verification statement
• Company equipment you may keep
• Another payment, benefit, or concession negotiated as part of the agreement

Find the exact amount or value of each item. If the agreement says your severance is based on a formula, such as two weeks of pay for every year of service, calculate it yourself and confirm which salary and service dates were used.

Watch for vague wording such as “COBRA assistance,” “continued benefits,” or “outplacement support.” Those phrases do not tell you what the employer will pay, how long the benefit will last, or what you must do to receive it.

Write the offer out in plain language:

In exchange for signing, I will receive $_____ in severance pay, _____ months of COBRA assistance worth $_____, and _____.

If you cannot complete that sentence using the written agreement, ask the employer to clarify the offer before you sign.

Do not count final wages, earned commissions, reimbursable expenses, vested benefits, or anything else the employer may already owe you as part of the severance offer. Question 3 explains how to separate those amounts.

3. What Does the Employer Already Owe You?

Severance is supposed to be something of value you receive for signing the agreement. It should not be padded with wages, benefits, or reimbursements you may already be entitled to receive.

Make two separate lists:

What I may receive without signing

• Wages or salary through your final day
• Overtime, shift differentials, or other earned premiums
• Earned commissions or incentive pay
• Bonuses already earned under the compensation plan
• Approved business expenses
• Vacation or PTO that must be paid under applicable state law or company policy
• Vested retirement benefits
• Employee contributions withheld for a retirement plan or HSA
• Other compensation promised by a contract, policy, or written plan

What I receive only if I sign

• Severance pay
• Additional benefits or continued salary
• Employer-paid COBRA assistance
• Extra retirement contributions or accelerated vesting
• Other payments, services, or concessions offered in exchange for the agreement

The first list is not automatically part of the severance offer just because the employer mentions it in the same document.

Check the employer’s math against your records

Compare the agreement and final-pay information with your:

• Recent pay stubs and time records
• Vacation or PTO balance
• Commission, bonus, or incentive plan
• Approved expense reports
• Offer letter or employment contract
• Employee handbook and severance policy
• Retirement, HSA, and equity statements
• Written promises or explanations from HR

Pay close attention to dates, hours, pay rates, commission calculations, bonus eligibility, unused leave, and contributions deducted from your paycheck.

Whether PTO, commissions, bonuses, or other compensation must be paid can depend on state law and the wording of the employer’s plan, policy, or contract. Vested retirement benefits generally remain yours, but the plan controls when and how you can access or move the money.

If the agreement does not clearly separate these items, ask the employer:

Please provide an itemized breakdown showing which payments and benefits I will receive regardless of whether I sign the agreement and which are being offered specifically in exchange for my signature.

If the employer claims that signing is required to receive money or benefits you believe are already yours, ask for the policy, plan provision, contract language, or other basis for that position in writing. A significant dispute over wages, commissions, bonuses, expenses, benefits, or equity may be a reason to consult an employment attorney before signing a release.

4. When and How Will You Be Paid?

The amount listed in the agreement is not necessarily the amount that will land in your bank account. Confirm how the severance will be paid, when payments will begin, and what will be withheld.

Confirm the payment schedule

Look for:

• Whether the severance will be paid in one lump sum or through installments
• The exact payment date or payroll schedule
• Whether payment begins after you sign, after any revocation period expires, or on another date
• Whether you must return company property or complete other requirements before payment
• Whether installments continue if you find another job
• What happens if a payment is late or incorrect
• Whether payment will be made by direct deposit, check, or another method

Watch for loose wording such as “promptly,” “within a reasonable time,” or “on the next available payroll.” Ask for an actual date or a clearly defined schedule.

Find out what will be withheld

Severance pay is generally taxable as wages. The employer may withhold:

• Federal income tax
• Social Security and Medicare taxes
• State or local income tax, where applicable
• Court-ordered garnishments or other legally required deductions
• Any additional deduction specifically permitted by the agreement or applicable law

Ask for an estimated payment breakdown showing the gross severance amount, expected deductions, and estimated net payment. The final amount may differ, but the estimate can help you plan.

Tax withholding is not the same as the amount of tax you ultimately owe. Depending on how the payment is processed, the employer may combine it with regular wages or treat it as a separate supplemental-wage payment. A large withholding amount does not necessarily mean the payment was taxed at a special final rate.

Check for conditions that could interrupt payment

If severance will be paid in installments, find out whether the employer can stop future payments. Look for conditions involving:

• Starting a new job
• Receiving other income
• Violating confidentiality or other continuing obligations
• Failing to cooperate with the former employer
• Making statements the employer considers disparaging
• Any claimed breach of the agreement

If payments can be stopped, the agreement should explain what triggers that decision, whether you receive notice, and whether you have a chance to correct or dispute the alleged violation.

Severance may also affect unemployment benefits differently depending on state law and how the payment is structured. Report the payment when applying or certifying for benefits and check the rules for your state.

If the payment date, withholding, deductions, or conditions are unclear, ask:

Please confirm the gross severance amount, payment method, expected payment date or schedule, anticipated deductions, and every condition that could delay, reduce, or stop payment.

5. When Will Your Health Coverage End?

Your final day of employment and your final day of health coverage may not be the same. Coverage could end on your last day, continue through the end of that month, or remain active longer under the severance agreement.

Confirm the exact end date for each benefit:

• Medical
• Prescription
• Dental
• Vision
• Health FSA or HRA
• Life insurance
• Disability insurance
• Coverage for your spouse or dependents

Do not settle for “through the end of the month” unless the employer identifies which month and confirms it in writing.

Find out what continued coverage will cost

If you are eligible for COBRA, you may be able to temporarily keep some of the same employer-sponsored coverage. However, you may have to pay the portion you previously paid, the portion your employer paid, and an administrative fee. The total can be substantially higher than the amount previously deducted from your paycheck.

Ask for:

• The monthly COBRA premium for each available plan
• Separate prices for individual, employee-plus-spouse, and family coverage
• The date your COBRA election notice should arrive
• The deadline for choosing coverage
• Instructions for submitting your election
• The first payment deadline
• Contact information for the plan administrator

COBRA generally allows at least 60 days to elect coverage, measured from the later of the date coverage ends or the date the election notice is provided. Do not wait until the deadline to figure out whether you can afford it.

Get the employer’s contribution in writing

If the severance offer includes continued coverage or COBRA assistance, find out exactly what that means.

Confirm:

• Which plans the employer will help pay
• The dollar amount or percentage it will cover
• Whether it pays the plan directly or reimburses you
• Whether you must submit proof of payment
• When the assistance begins and ends
• Whether it stops if you become eligible for another health plan
• Whether you must pay the full premium while waiting for reimbursement

“Three months of COBRA assistance” is not specific enough. The agreement should explain which three months are covered, how payment works, and what you will owe during that period.

Also check whether the employer’s assistance is included in the severance agreement itself or only described in a separate benefits notice. If the employer promised to help with coverage, make sure the promise is in writing before you sign.

If any part is unclear, ask:

Please confirm the final date of each current benefit, the monthly cost and election deadlines for continued coverage, and exactly how long the employer will pay or reimburse any portion of that cost.

6. What Rights or Legal Claims Are You Being Asked to Release?

A release of claims is one of the most important parts of a severance agreement. By signing it, you may give up the right to sue the employer or recover money for certain events that happened before you signed.

Look for headings such as:

• Release of Claims
• General Release
• Waiver
• Claims Released
• Covenant Not to Sue

Identify which claims are included

The agreement may list specific federal, state, and local laws, followed by broader language covering nearly every claim connected to your employment or termination.

The release may include claims involving:

• Discrimination, harassment, or retaliation
• Wages, overtime, commissions, bonuses, or other compensation
• Leave, disability accommodations, or benefits
• Employment contracts or promises
• Wrongful termination
• Emotional distress, reputational harm, or other alleged damages
• Attorney fees, penalties, interest, or other legal remedies

You do not need to recognize every statute named in the agreement, but you should understand what types of claims you are surrendering. A long parade of legal citations is not the same as a plain-English explanation.

Check the time period covered

Most releases apply to claims based on events that occurred on or before the date you sign. They may also include claims you do not currently know about.

Pay close attention to phrases such as:

• “Known or unknown”
• “Suspected or unsuspected”
• “Accrued or unaccrued”
• “From the beginning of time through the execution date”
• “Arising from or related to employment or separation”

Unknown-claims language matters because you could discover new information after signing and still be prevented from pursuing the claim. Whether particular claims can legally be waived depends on the law involved and the wording and circumstances of the agreement.

A severance agreement generally cannot require you to waive claims based on events that have not happened yet. Check the effective date carefully, especially if you will continue working for a period after signing.

Find out who is protected by the release

The agreement may protect far more than the company named on your paycheck. It could also release claims against:

• Parent companies, subsidiaries, and affiliated businesses
• Owners, officers, directors, and board members
• Current and former employees or supervisors
• Benefit plans and plan administrators
• Insurance companies, agents, attorneys, and successors

If the list is broad or includes people and organizations you do not recognize, ask the employer to explain who they are and why they are included.

Check which rights are preserved

The agreement should identify claims and rights that are not being released. Depending on the law and circumstances, these may include:

• Rights or claims that cannot legally be waived
• Claims arising after you sign
• Rights to vested retirement benefits
• Rights to enforce the severance agreement itself
• Workers’ compensation or unemployment claims
• The right to file a charge with or communicate with a government agency
• The right to report possible legal violations or cooperate with an investigation

An agreement generally cannot prevent you from filing a charge with the EEOC or participating in an EEOC investigation. However, a valid release may limit your ability to personally recover money through certain claims. The EEOC explains the distinction in its guidance on severance waivers.

If you have already raised a concern about discrimination, retaliation, unpaid compensation, leave, accommodations, benefits, safety, or another possible violation, do not assume the release is harmless boilerplate. It may be aimed directly at that dispute.

Ask the employer:

Please identify in plain language which claims this agreement releases, the time period it covers, every person or organization protected by the release, and which rights or claims are specifically excluded.

A broad release involving a possible legal claim is one of the strongest reasons to consider having an employment attorney review the agreement before you sign.

7. What Obligations Continue After You Leave?

Your employment may be ending, but some parts of the agreement can follow you long after your final paycheck arrives. Identify every restriction, responsibility, and promise that remains in effect after you leave.

Also check whether the agreement says that an earlier employment contract, confidentiality agreement, intellectual-property agreement, or company policy remains in effect. Some of your continuing obligations may be buried in documents you signed years ago rather than repeated in the severance agreement.

Common continuing obligations

Confidentiality

This may restrict you from sharing trade secrets, customer information, internal records, or other confidential business information. Some agreements also try to keep the severance terms confidential.

Check what the agreement considers confidential, who you may speak with, and whether there are exceptions for your spouse, attorney, tax adviser, government agencies, or disclosures required by law. Make sure the wording does not appear to prohibit lawful reporting or communication with a government agency.

Nondisparagement

This may restrict what you can say about the employer, its leaders, employees, products, or business practices.

Look for vague terms such as “negative,” “harmful,” or “disparaging.” Check whether the clause applies only to statements you know are false or to virtually any criticism, whether it lasts indefinitely, and whether the employer has agreed not to disparage you in return.

Some overly broad confidentiality and nondisparagement provisions may violate federal labor law when applied to workers protected by the National Labor Relations Act. That protection does not cover every worker or every statement.

Noncompete and nonsolicitation

A noncompete may limit where you can work, what services you can provide, or whether you can start a competing business. A nonsolicitation clause may restrict contact with former customers, clients, vendors, or coworkers.

Find the exact:

• Activities being restricted
• People or businesses covered
• Geographic area
• Length of the restriction
• Exceptions, if any

Do not assume a noncompete is automatically invalid. The FTC’s nationwide Noncompete Rule is not in effect, and enforceability currently depends heavily on state law and the facts involved. A restriction that could interfere with your next job deserves careful legal review.

Cooperation

A cooperation clause may require you to help the former employer with lawsuits, investigations, audits, or other matters after you leave.

Check how long the obligation lasts, how much notice you must receive, whether cooperation is limited to reasonable times, and whether the employer will pay your expenses or compensate you for substantial time. “Cooperate as requested” can become a rather large favor if the agreement includes no boundaries.

Arbitration

The agreement may require future disputes to be handled through private arbitration instead of court. It may also confirm that an arbitration agreement you signed earlier remains in effect.

Check which disputes are covered, who pays the fees, where arbitration must occur, which rules apply, and whether you are waiving a jury trial or the ability to participate in a class or collective action.

No-rehire

A no-rehire clause may prevent you from applying to or working for the employer again. Broad language may also cover parent companies, subsidiaries, affiliates, acquired companies, or businesses that acquire your former employer later.

Find out exactly which organizations are covered and whether the restriction lasts forever. This can matter far more than it first appears when the employer has a large corporate family or a habit of buying other companies.

Return of property and deletion of information

You may be required to return equipment, documents, identification, keys, files, or other company property and delete company information from personal devices or accounts.

Get written confirmation of:

• What must be returned or deleted
• The deadline and return instructions
• Who pays shipping costs
• Whether you may keep personal files or employment records
• How the employer will confirm that everything was received

Do not destroy records you are legally entitled or required to preserve. If personal and company information are mixed together, ask for instructions before deleting anything.

Check the scope and duration

For every continuing obligation, identify:

• What the clause prohibits or requires
• When it begins
• When it ends
• Who and what it covers
• Any exceptions
• Whether an earlier agreement also remains in effect
• What happens if the employer claims you violated it

Do not rely on a heading alone. A clause labeled “Confidentiality,” for example, may also contain nondisparagement, cooperation, repayment, or reporting restrictions.

If the language is unclear, ask:

Please identify every obligation that continues after my employment ends, how long each obligation lasts, any earlier agreements that remain in effect, and the consequences of an alleged violation.

Restrictions affecting your ability to find work, report possible wrongdoing, discuss working conditions, or defend yourself against future accusations are strong reasons to consider legal review before signing.

Current federal points verified:

• The FTC’s nationwide Noncompete Rule is not in effect or enforceable. State law and individual circumstances remain critical. Federal Trade Commission: Noncompete Rule
• In an April 2026 decision summary, the NLRB continued applying McLaren Macomb to overly broad confidentiality and nondisparagement provisions in severance agreements. NLRB: Summary of Decisions for April 6–10, 2026
• Agreements may not unlawfully impede direct reporting of possible securities violations to the SEC. SEC: Whistleblower Protections

8. Could You Lose or Have to Repay the Severance?

Some severance agreements allow the employer to stop payments, demand repayment, or seek additional money if it claims you violated the agreement. Do not assume the most you could lose is whatever severance remains unpaid.

Look for terms such as:

• Repayment or reimbursement
• Forfeiture
• Clawback or recoupment
• Indemnification
• Liquidated damages
• Attorneys’ fees and costs
• Injunctive relief
• Remedies
• Breach or default

These consequences may appear in several different sections, so search the entire agreement.

Find out what triggers the penalty

A repayment or forfeiture clause may be tied to obligations involving:

• Confidentiality
• Nondisparagement
• Noncompete or nonsolicitation restrictions
• Cooperation with the former employer
• Return of company property
• Statements or certifications made in the agreement
• Filing or pursuing certain legal claims
• Another alleged breach of the agreement

The clause should be specific enough for you to understand what conduct could cost you money. Watch for language allowing the employer to act based only on its own belief that a violation occurred.

Also check whether the employer must notify you of the alleged violation and give you time to correct it before imposing a penalty.

Calculate how much money is at risk

The financial consequence could include:

• Loss of future severance installments
• Repayment of some or all severance already received
• Repayment of the gross severance amount before taxes, even though you received less after withholding
• A fixed amount of liquidated damages
• Reimbursement for losses the employer claims you caused
• The employer’s attorneys’ fees and legal costs
• More than one of these remedies for the same alleged violation

Liquidated damages are a predetermined amount you agree to pay if a specified violation occurs. Indemnification may require you to reimburse the employer for certain losses, claims, expenses, or legal costs. Both can expose you to more than the original severance payment.

Write down the worst-case amount using the agreement’s actual terms:

If the employer claims I violated the agreement, it may stop $____ in unpaid severance, demand repayment of $____, and seek an additional $____ or an amount that is not clearly limited.

If you cannot determine the maximum amount, the risk may be open-ended.

Check whether the remedies are one-sided

Compare what happens if you violate the agreement with what happens if the employer fails to pay you or breaks one of its promises.

Look for:

• Whether only the employer can recover attorneys’ fees
• Whether the employer can immediately stop payments
• Whether you must continue honoring the release and restrictions even if the employer breaches the agreement
• Whether you have a reasonable period to correct a violation
• Whether the penalty applies to every breach, no matter how minor
• Whether the employer can seek both repayment and additional damages

A clause appearing in the agreement does not automatically mean every part of it is legally enforceable. Contract law and employment law vary by state, and some penalties or restrictions may be limited by law. But finding out after the employer demands repayment is a lousy time to begin investigating.

If the consequences are unclear, ask:

Please identify every action that could cause severance to be withheld, stopped, forfeited, or repaid; whether repayment would be based on the gross or net amount; any additional damages, fees, or costs I could owe; and whether I would receive notice and an opportunity to correct or dispute an alleged violation.

A clause that could require repayment of the entire severance, impose substantial damages, or leave your financial exposure open-ended is a strong reason to have an employment attorney review the agreement before you sign.

Important Note:

A severance agreement generally cannot interfere with protected access to agencies such as the EEOC, even though a valid release may affect the person’s ability to recover money through certain claims.

EEOC guidance on severance waivers

9. Are All Promised Payments and Benefits Included in Writing?

Compare the severance agreement with everything the employer previously promised or provided in writing. This includes promises made during the layoff meeting, follow-up conversations, emails, benefits summaries, and company policies.

Check the agreement against your:

• Offer letter or employment contract
• Compensation, commission, or bonus plan
• Severance plan or policy
• Employee handbook
• Benefits documents
• Equity or stock agreements
• Retirement-plan documents
• Emails and other written communications from HR or management
• Notes from the layoff meeting or later conversations

Look for differences involving:

• The severance amount
• The number of weeks or months used to calculate severance
• Salary continuation
• Bonus or commission eligibility
• PTO or vacation payout
• COBRA or other health-coverage assistance
• Retirement contributions or vesting
• Stock options or other equity
• Outplacement services
• References or employment verification
• Company equipment you were told you could keep
• Any other payment, benefit, or concession discussed

Watch for an “entire agreement” clause

Many severance agreements contain language stating that the written agreement represents the complete agreement between you and the employer. It may also say that you are not relying on any promise that does not appear in the document.

Look for headings or phrases such as:

• Entire Agreement
• Complete Agreement
• Integration
• No Other Representations
• No Reliance
• Supersedes Prior Agreements

This language can make it difficult to rely later on something HR or management promised verbally or in a separate email.

Do not sign based on “we’ll take care of that later.” If a promise matters to your decision, it belongs in the agreement or in a clearly identified written document incorporated into the agreement.

Make sure the details match

A promise is not clear enough merely because the agreement mentions it. Confirm that the written terms explain:

• The exact payment amount or calculation method
• What benefit or service will be provided
• When it begins and ends
• Who is eligible
• What you must do to receive it
• Whether any conditions could reduce or cancel it
• Which document controls if two documents conflict

For example, “The company will assist with COBRA” does not explain how much it will pay, which plans are covered, how long assistance lasts, or whether you must pay first and wait for reimbursement.

Get corrections before signing

If the agreement leaves out a promise or contains different terms, ask the employer to correct the agreement before you sign. A verbal explanation or casual email may not override the contract’s actual wording.

You can ask:

The agreement does not include, or appears to conflict with, the following payments and benefits previously communicated to me: ________. Please provide a revised agreement that includes the complete terms, amounts, dates, conditions, and payment arrangements before I sign.

Review the revised document from beginning to end. Do not assume the employer changed only the section you questioned.

If the employer refuses to include an important promise in the agreement, treat that promise as uncertain when deciding whether the offer is worth signing. A substantial conflict involving compensation, benefits, equity, or another material promise may justify legal review.

10. Can You Revoke the Agreement After Signing?

Do not assume you can cancel a severance agreement after signing it. There is no general federal rule giving every worker three days, seven days, or any other automatic period to change their mind.

A right to revoke may come from:

• Federal law protecting certain workers age 40 or older
• State law
• The terms of the severance agreement itself

If none of those provides a revocation period, your signature may become binding as soon as you sign or submit the agreement.

Special rules for certain workers age 40 or older

The federal Age Discrimination in Employment Act protects workers age 40 or older. The Older Workers Benefit Protection Act sets additional requirements when an employer asks a protected worker to waive claims under that law.

For the waiver of federal age-discrimination claims to be valid, the worker generally must receive:

• At least 21 days to consider an individual severance offer
• At least 45 days if the waiver is requested as part of an exit incentive or other employment-termination program offered to a group or class of workers
• At least seven days after signing to revoke the agreement

The agreement must also advise the worker in writing to consult an attorney before signing.

The seven-day revocation period cannot be shortened or waived by the worker or employer. The waiver of federal age-discrimination claims does not become effective or enforceable until that period expires.

These federal requirements do not automatically apply merely because the worker is 40 or older. They apply when the agreement asks the worker to waive rights or claims under the Age Discrimination in Employment Act.

The 21 or 45 days are yours to use

An employer may tell you that you can sign before the consideration period ends. You may choose to do so, but you generally cannot be pressured into signing early through threats, misrepresentation, or different terms offered only to workers who sign sooner.

The consideration period generally begins when you receive the employer’s final offer. A material change to the offer may restart that period, although the rules allow the parties to agree that a change will not restart it. If the employer sends a revised agreement, confirm the new deadline in writing.

Workers receiving a group offer may also be entitled to written information about the group covered by the program, eligibility requirements, applicable deadlines, and the job titles and ages of workers selected and not selected. Question 11 explains the documents and disclosures you should have before deciding.

Follow the revocation instructions exactly

If you have a right to revoke, find:

• The date and time the revocation period ends
• Who must receive the revocation
• Whether it must be sent by email, mail, electronic system, or another method
• Whether notice must be received by the deadline or merely sent by then
• When the agreement becomes effective
• What happens to the promised severance if you revoke

Send the revocation in writing and keep proof showing what you sent, when you sent it, and when it was received. Do not rely on a voicemail or an informal conversation with HR.

Revoking the agreement generally means rejecting the severance offer. You would normally lose the additional payment or benefits offered in exchange for signing, but the employer should still provide anything you are legally entitled to receive without the agreement.

If the revocation language is missing or unclear, ask:

Please confirm whether I have the right to revoke this agreement after signing; the exact revocation deadline and submission instructions; when the agreement becomes effective; and which payments or benefits I will not receive if I revoke it.

If you are 40 or older and the agreement releases age-discrimination claims but does not provide the required consideration or revocation period, or if you were included in a group layoff and did not receive the required disclosures, consider having an employment attorney review the agreement before signing.

11. Do You Have Every Document the Agreement Mentions?

A severance agreement may refer to policies, plans, attachments, schedules, exhibits, or earlier agreements that are not included in the packet. Those documents can define what you receive, what restrictions still apply, or how the employer calculated the offer.

Read the agreement from beginning to end and mark every reference to another document.

Common examples include:

• Severance plans or policies
• Bonus, commission, or incentive plans
• Retirement or equity-plan documents
• COBRA and other benefit information
• Confidentiality or intellectual-property agreements
• Noncompete or nonsolicitation agreements
• Arbitration agreements
• Employee handbooks or company policies
• Payment schedules or calculation worksheets
• Attachments, exhibits, appendices, or addenda
• Age-and-job-title disclosures for certain group termination programs – required group-layoff age and job-title disclosures must be provided at the beginning of the 45-day consideration period, not merely sometime before the worker decides.

Watch for phrases such as:

• “Incorporated by reference”
• “Subject to the terms of”
• “As provided in the plan”
• “Attached as Exhibit A”
• “Previously executed agreement”
• “Company policies, as amended”
• “Documents provided separately”

“Incorporated by reference” generally means the separate document is being treated as part of the agreement even though its full language is not repeated. Do not agree to follow a document you have not been given a chance to read.

Check that the documents are complete and current

For every referenced document, confirm:

• You received the entire document, not a summary or selected pages
• All attachments, tables, and exhibits are included
• The document is readable
• The title and effective date match the agreement
• You know which version applies
• There are no blanks or missing pages
• You understand which document controls if the terms conflict

If the agreement refers to a policy that the employer may change later, ask which version applies to you and whether later changes could affect your severance, benefits, or continuing obligations.

Group termination disclosures for certain workers age 40 or older

If you are 40 or older and are being asked to waive federal age-discrimination claims as part of an exit incentive or other group termination program, the employer generally must provide additional written information.

The disclosure must identify:

• The group, class, or organizational unit covered by the program
• The eligibility requirements
• The applicable time limits
• The job titles and ages of people eligible or selected
• The ages of people in the same job classifications or organizational unit who were not eligible or selected

The information should allow you to understand which employees were considered and compare those selected with those not selected. Ages generally must be listed by individual age, not grouped into broad ranges.

These disclosure rules do not apply to every layoff or every severance agreement. They are tied to certain group programs involving waivers of federal age-discrimination claims. The consideration and revocation periods that may apply are explained in Question 10.

Ask for missing documents before deciding

If anything is missing, request it in writing:

The agreement refers to the following documents or disclosures that were not included or are incomplete: ________. Please provide complete copies, identify the version and effective date that apply, and confirm whether receiving them changes my signing deadline.

Do not assume the signing deadline automatically pauses because you requested missing information. Unless the employer gives you a revised deadline in writing or applicable law requires otherwise, continue treating the original deadline as active.

If the employer will not provide a document that defines your payment, benefits, restrictions, or legal rights, you are being asked to sign without seeing the whole deal. That is a strong reason to delay signing if possible and consider legal review.

12. Is Legal Review Worth the Cost?

Not every severance agreement requires an attorney. Some are short, reasonably clear, and offer enough value that the decision is fairly straightforward. Others ask you to release possible legal claims, accept restrictions on future work, or risk repaying money if the employer says you violated the agreement.

The question is not simply whether an attorney costs money. Compare that cost with what you could gain, lose, or unknowingly give up by signing.

Legal review may be especially worthwhile when:

• The severance payment or benefits are substantial
• The agreement releases claims you may actually have
• You believe compensation, commissions, bonuses, expenses, PTO, equity, or benefits are missing or calculated incorrectly
• You suspect discrimination, retaliation, wrongful termination, or another legal violation
• Your termination followed a complaint, protected leave, request for an accommodation, workplace injury, safety report, wage complaint, or other protected activity
• You have an employment contract, commission plan, severance policy, or written promise that may conflict with the agreement
• A noncompete, nonsolicitation, no-rehire, confidentiality, or nondisparagement clause could interfere with future employment
• The agreement requires arbitration or contains a broad release of unknown claims
• You could lose unpaid severance, repay money already received, or owe additional damages or attorneys’ fees
• Important documents or group-layoff disclosures are missing
• You are 40 or older and the agreement may not comply with the special rules for waiving federal age-discrimination claims
• The agreement is vague, internally inconsistent, unusually complicated, or written as though somebody was paid by the semicolon
• The employer is pressuring you to sign quickly or discouraging you from seeking legal advice

What an attorney can help determine

An employment attorney can:

• Explain what rights and claims you would release
• Identify obligations that continue after you leave
• Review whether payment, benefit, and waiver terms appear to comply with applicable law
• Evaluate possible wage, contract, discrimination, retaliation, leave, accommodation, or termination claims
• Explain whether restrictions may be enforceable under your state’s law
• Identify missing language, documents, exceptions, or protections
• Estimate the financial risk created by repayment, forfeiture, indemnification, or damages provisions
• Recommend changes and, if appropriate, negotiate with the employer

A legal review does not guarantee that the employer will increase the offer or revise the agreement. Its value may be confirming that the deal is reasonable, identifying a problem before it becomes yours, or helping you decide that the severance is not worth the rights and restrictions attached to it.

Compare the cost with what is at stake

Consider:

• The gross and estimated net value of the severance
• The value of continued health coverage and other benefits
• The amount the employer may already owe you
• The strength and possible value of any disputed legal or contractual claim
• The effect of restrictions on your ability to earn a living
• The amount you could be required to repay
• Any additional damages, legal costs, or open-ended liability
• How much the lawyer will charge for the review

A $600 review of a small, straightforward agreement may consume too much of the offer to make financial sense. The same review could be cheap insurance when the agreement involves substantial compensation, a possible legal claim, or restrictions that could block your next job.

Cost is not the only consideration. A modest severance offer can still carry expensive consequences if the agreement contains a broad noncompete, an open-ended indemnification clause, or a requirement to repay the gross severance plus the employer’s legal fees.

Ask about fees before hiring anyone

Contact an attorney who regularly represents employees in employment matters, not simply a lawyer who handles contracts generally.

Before scheduling, ask:

• Whether the attorney reviews severance agreements
• Whether the initial consultation is free or paid
• Whether the review is billed at a flat fee or hourly rate
• What the quoted fee includes
• Whether written comments, proposed revisions, or negotiation are included
• What additional work could increase the cost
• Whether the attorney sees any potential conflict of interest involving your employer
• What documents you should provide
• Whether the review can be completed before your signing deadline

Get the fee arrangement in writing. A flat-fee review may include only a consultation and explanation of the agreement, while negotiation, legal research, or written revisions may cost more.

You can also ask the employer to pay or reimburse reasonable attorney fees for reviewing the agreement. The employer does not have to agree, but the request may be worth making, particularly when the agreement is complicated or specifically advises you to consult an attorney.

If private counsel is unaffordable, check your state or local bar association’s lawyer-referral service, employee-rights organizations, law-school clinics, and legal-aid programs. Eligibility, available services, and fees vary, and some programs may not handle severance reviews or employment disputes.

Prepare before the consultation

Legal fees go farther when the attorney does not have to conduct an archaeological dig through twelve years of screenshots.

Provide:

• The complete severance agreement and every attachment
• Your offer letter or employment contract
• Relevant compensation, bonus, commission, severance, and benefit documents
• Applicable handbook provisions or company policies
• Recent pay records and benefit statements
• Important emails or written communications
• A short timeline of relevant events
• A list of specific questions and concerns
• The signing deadline

Do not omit facts because they seem embarrassing, unimportant, or unfavorable. The attorney needs the whole situation to evaluate the agreement accurately.

If the rights being released or the financial risk created by the agreement could be worth considerably more than the cost of review, legal advice is usually a sensible expense. If the agreement is clear, the offer is modest, no dispute exists, and the continuing obligations are narrow, you may decide the cost is not justified. Either way, make that decision after understanding what you are signing, not after assuming all severance agreements are harmless paperwork.

Severance Agreement Reference Sources

1. U.S. Department of Labor: Severance Pay
2. U.S. Department of Labor: Commissions
3. U.S. Department of Labor: FAQs About Retirement Plans and ERISA
4. EEOC: Understanding Waivers of Discrimination Claims in Employee Severance Agreements
5. U.S. Department of Labor: COBRA Continuation Coverage FAQs for Workers
6. U.S. Department of Labor: COBRA Continuation Coverage General Overview
7. IRS Publication 15: Employer’s Tax Guide
8. IRS Publication 4128: Tax Impact of Job Loss
9. HealthCare.gov: Coverage After Losing Job-Based Insurance
10. Federal Trade Commission: Noncompete Rule
11. NLRB: Summary of Decisions
12. SEC: Whistleblower Protections
13. EEOC: Age Discrimination in Employment Act of 1967
14. EEOC: Waivers and Claims Under the ADEA
15. 29 C.F.R. § 1625.22: Waivers of Rights and Claims Under the ADEA
16. Legal Services Corporation: Find Legal Help