The Severance Agreement Decoder

What it does: The release is usually the core purchase. You may waive employment-related claims in exchange for consideration.

Check: Identify every law, claim, person, affiliate, and time period covered. Separate new consideration from wages, commissions, benefits, or property already owed under law, policy, or contract.

Counterintuitive point: Cash already owed is not automatically new severance consideration.

Route: Use counsel when the facts involve discrimination, retaliation, protected leave or activity, unpaid compensation, an existing complaint, or another claim you cannot value safely.

What it does: An employee age 40 or older may be asked to waive federal ADEA claims. OWBPA rules govern whether that waiver is knowing and voluntary.

Check: Look for specific ADEA language, written advice to consult an attorney, new consideration, and a seven-day revocation period. An individual offer generally provides at least 21 days to consider the waiver. A covered group program generally provides at least 45 days and may require decisional-unit, eligibility, time-limit, age, and job-title information.

Counterintuitive point: A defect may affect the federal age-claim waiver without deciding every other provision in the agreement.

Route: Mark counsel if the agreement, disclosure, group boundary, or timing appears incomplete. Do not declare the whole agreement void from a checklist result.

What it does: The clause limits statements that could harm the company or named people.

Check: Is it mutual? Does it define prohibited statements? Does it preserve lawful reporting, agency participation, testimony, and any protected discussion of working conditions?

Counterintuitive point: A clause can create practical risk before anyone proves a breach.

Route: Ask to limit the clause to knowingly false statements and to add appropriate legal carveouts. Coverage under federal labor law depends on role and facts. Supervisors and other workers may not share the same protections.

What it does: A noncompete may restrict employers, work, geography, or time. Nonsolicitation provisions may restrict contact with employees, customers, or prospects.

Check: Identify the exact work barred, named competitors, geography, duration, governing law, venue, notice duties, and remedies. Compare the restriction with the jobs you actually need to pursue.

Counterintuitive point: Practical hiring friction can matter even when enforceability is uncertain.

Route: Do not rely on a presumed nationwide rule or a casual state-law summary. Current state law, role, compensation, contract language, and work location can change the result. Mark counsel when the clause touches a realistic target role.

What it does: The agreement may protect trade secrets, proprietary information, and the agreement's terms.

Check: Preserve lawful reporting, agency participation, testimony, and discussion protected by applicable law. Confirm that the definition doesn't claim public information, general skill, or information the company doesn't own.

Counterintuitive point: You can respect confidentiality without surrendering rights that cannot lawfully be waived.

Route: Never take company files to create leverage. Bring counsel the agreement, your lawful personal records, a timeline, and questions. Ask before moving anything else.

What it does: The clause may require later help with litigation, audits, investigations, or transactions.

Check: Look for duration, subject limits, reasonable notice, mutually workable timing, expense reimbursement, and payment for substantial time.

Counterintuitive point: A clause that looks harmless at signing can become a claim on a future employer's calendar.

Route: Ask for reasonable notice, convenient scheduling, expenses, and compensation. Counsel should review an open-ended obligation tied to investigations or testimony.

What it does: A clawback may let the company stop or recover severance after an alleged breach.

Check: Who decides breach? Is notice required? Can you cure? Does recovery cover all severance or only proven loss? Are fees, injunctions, or offsets included?

Counterintuitive point: The remedy can be more aggressive than the underlying promise.

Route: Ask for notice, a cure period where appropriate, proportional remedies, and an independent determination. Mark counsel when the company can declare breach in its sole discretion.

What it does: The agreement may control what HR confirms and whether the company will state rehire eligibility.

Check: Identify the authorized speaker, exact script, title, dates, departure description, and rehire language. Separate an official company response from a manager's personal reference.

Counterintuitive point: A friendly manager's promise can disappear after a reorganization. Written institutional language survives the manager.

Route: Ask for a written script and a named backup contact. Do not ask the company to make a statement it cannot truthfully support.

What it does: These sections set payment timing and may address insurance subsidies, retirement, deferred compensation, bonuses, options, or other equity.

Check: Record gross amount, payment schedule, tax withholding, benefit end dates, subsidy duration, plan-document controls, vesting treatment, and option exercise windows. Chapter 6 handles the deadline calendar.

Counterintuitive point: A cash amount can look generous while a short option window or insurance gap creates a larger loss.

Route: Mark every missing date as a question. Use plan documents and qualified tax or benefits advice for decisions the agreement does not settle.