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Part 7: Severance

What you are being asked to trade

A severance agreement is a contract. The employer offers money or benefits you are not already owed, and in exchange you sign a release: you give up the right to bring claims covered by the release, usually including claims about how the employment ended. Read it as a trade, because that is what it is. The EEOC's own guidance to employees, Understanding Waivers of Discrimination Claims in Employee Severance Agreements at eeoc.gov, is worth reading in full before you sign one. It is written for the person holding the pen, which at this moment is you.

Things the EEOC guidance makes clear:

• The payment offered for your signature must be something in addition to what you are already entitled to. Money you are already owed, such as earned wages or a time-off payout your policy guarantees, is not the consideration for the release.
• A valid release does not cover claims that arise after the date you sign it.
• No agreement can lawfully stop you from filing a charge with the EEOC, or from testifying, assisting, or participating in an EEOC investigation or proceeding. A clause that tries to do that is not enforceable, per the EEOC.
• A waiver signed because of fraud, duress, or improper pressure can be challenged. Courts look at the whole picture, including whether the language was clear, whether you had time to consider it, and whether you were advised to consult an attorney.

If you are 40 or older: the federal floor

For a release of age discrimination claims, federal law sets minimums, and they are not negotiable downward:

• At least 21 days to consider the agreement, counted from the employer's final offer. If the employer makes material changes, the period starts over.
• At least 45 days if the waiver is offered as part of a group exit incentive or other group termination program. In a group program, the employer must also give you written information about the group the decision was made from, the eligibility factors, the time limits, and the job titles and ages of those selected and not selected.
• 7 days to revoke after you sign. This revocation period cannot be waived or shortened by either side, for any reason.
• The agreement must advise you in writing to consult an attorney before signing, and it must refer to the Age Discrimination in Employment Act by name.

If any of these pieces is missing from an agreement that asks you to release age claims, that is a concrete fact to raise, in writing, or to take to an attorney.

If you are under 40

No federal floor sets your consideration period. The deadline in the employer's letter is the only deadline you have, which is why Part 2 told you not to sign on the first day. Ask for more time in writing, briefly and without apology: you are reviewing a legal document that trades away legal rights, and a dated email asking for two weeks is a reasonable thing in any office. Whatever answer you get, log it in Worksheet 6.

Read these clauses twice

Whatever your age, read these parts of the agreement word by word:

• The release itself: which claims, which laws, which time period. Broad is normal in these documents. Broad and confusing is a reason to ask questions.
• Payment terms: amount, lump sum or installments, dates, and what happens to the payments if a dispute arises. Severance pay is taxable income, and payments for accumulated vacation or sick time are taxable too, per the IRS. Withholding will come out before you see the money, so plan on the net, not the headline.
• Restrictive clauses: non-compete, non-solicit, confidentiality, and non-disparagement terms, and whether each one runs both ways or only against you. A clause that limits your next job is worth more attention than any other line in the document, because it is the one that follows you.
• References: what the company will say, and to whom. If the agreement promises a neutral reference, that promise belongs in writing, here, not in a hallway.
• Return of property and final pay: the agreement should not quietly reprice money covered in Part 6. Earned pay is earned pay.

The question-builder

This guide does not hand you negotiation lines, because no honest guide can tell you what your employer will accept. What it can do is make sure you ask the complete set of questions before the deadline, in writing:

1. What exactly am I releasing, and is any claim carved out?
2. What is the consideration, beyond everything I am already owed, and when is each payment made?
3. Which restrictive clauses apply to me, for how long, and over what territory or list of companies?
4. What will the company say to a reference check, word for word if possible?
5. When does my health coverage end, and does this agreement change anything in Part 8?
6. Does receiving this severance affect my unemployment claim in this state, and have I reported it to the state agency as Part 5 describes?
7. If I am 40 or older, where in this document are the 21 or 45 days, the 7-day revocation, and the written advice to consult an attorney?

When the stakes justify a lawyer: if the amount is large, if a restrictive clause threatens your next job, if you believe discrimination or retaliation played a role, or if any sentence in the agreement defeats you after two honest readings. The agreement itself, if you are 40 or older, tells you in writing to consult one. A one-hour review of a document you will live under for years is not an indulgence.

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