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Severance Agreements


When an employee is terminated, he or she is often offered a severance agreement. The agreement might offer compensation in exchange for waiving rights to come back against the employer for a variety of claims. But when is it a good idea to accept one or to reject one? How much time do you have to decide whether to accept it? And what rights are you giving up? These questions are important to ask before signing any legal document — especially a severance agreement.


A severance agreement generally must list all statutes and laws under which claims are being released. There is usually a paragraph with a laundry list of these statutes. Failure to list one of the laws may result in the employee’s ability to bring a claim for its violation, even if the employee accepts the agreement.


If an employee is over 40, they must be given at least 21 days to review the severance agreement before signing it under the Older Workers Benefit Protection Act.


And although references are not normally offered, it may be important for the employee to negotiate a reference from the former employer to allow the employee to find a new job.


Sometimes employers use “template” severance agreements that contain errors, violations, or loopholes. It’s also important to know what rights you might be retaining.


In sum, the review of a severance agreement is multi-faceted and can affect not just what an employee gets from their former employer, but what they may be able to do in the future.


Culik Law has experience reviewing severance agreements. Contact us for a case evaluation.