The short version
- If you are 40 or over, federal law gives you at least 21 days to consider the agreement — 45 in a group layoff — plus 7 days to revoke after signing. The revocation period cannot be waived.
- Severance must be genuinely extra. An employer cannot present wages you have already earned, or accrued leave you are owed, as the consideration for a release.
- Some rights survive any release: filing a charge with the EEOC, workers' compensation, unemployment, vested retirement benefits, and claims arising after you sign.
- The most negotiable terms are usually not the money — they are the reference language, the departure date, benefits continuation, and the scope of non-disparagement and confidentiality.
What you are actually being sold
The heart of a severance agreement is the release of claims: a promise not to sue, covering everything that happened up to the day you sign. Discrimination, harassment, retaliation, wrongful termination, unpaid wages, breach of contract, emotional distress — a standard release sweeps in all of it, whether or not you currently believe you have a claim.
That is a legitimate transaction and often a sensible one. Litigation is slow, expensive and uncertain, and a certain payment now can easily beat a possible payment in three years. The question is not whether to make the trade in principle. It is whether the price is right and the terms are the ones the law requires — and you cannot answer either question in the twenty minutes most people give it.
The deadlines, and why the one on the page may be wrong
If you are 40 or over and the agreement releases age discrimination claims, the Older Workers Benefit Protection Act sets minimum timings that the employer cannot shorten. These are the most commonly ignored provisions in the whole area, usually through carelessness rather than design.
The statutory clock for workers 40 and over
Day 0
Agreement handed to you
The clock starts on the final version. An offer that "expires Friday" does not override the statutory minimum.
Day 21
Earliest the period can end
45 days instead, if you are one of a group being let go — and the employer must disclose the ages and job titles of those selected and not selected.
You sign
Revocation window opens
Seven days to change your mind, in writing. Not waivable.
+7 days
It becomes effective
Payment normally follows this date, not the signature date — which is why the money is never immediate.
A valid waiver of age discrimination claims must also be written in plain language you can understand, and must expressly advise you in writing to consult an attorney. A release that skips any required element is unenforceable as to those claims — meaning you could keep the money and still bring the claim. Employers who know this are careful; a surprising number are not.
Under 40, these federal minimums do not apply and the timing is whatever the employer offers. You can still ask for more time, and asking is normal. "I want to review this properly before signing — can we say end of next week?" is a request almost nobody refuses, because refusing it looks like exactly what it is.
The rights you keep no matter what it says
Some things cannot be signed away, and an agreement purporting to waive them is either void as to those points or, in some cases, unlawful in itself.
What the release reaches, and what it never could
A standard release covers
- Discrimination, harassment and retaliation claims
- Wrongful termination and breach of contract
- Everything that happened up to the day you sign
Partly, and carefully
- Personal monetary recovery from an agency charge
- Non-disparagement, where it is narrowly drawn
- Confidentiality, subject to legal carve-outs
It cannot reach
- Filing a charge with the EEOC, and cooperating with it
- Workers' compensation, in most states
- Unemployment benefits and vested retirement benefits
- Reporting to a regulator, and claims arising after you sign
Reading the rest of the document
Beyond the release, six clauses do most of the work — and several of them constrain your next job rather than your last one.
| Clause | What to check | What to ask for |
|---|---|---|
| Non-disparagement | Whether it binds both sides or only you | Make it mutual, and limit the company side to named executives who can realistically be bound |
| Confidentiality | Whether it covers the existence of the agreement, the amount, or the underlying facts | A carve-out for your spouse, lawyer and tax adviser at minimum, plus anything required by law |
| Restrictive covenants | Whether new non-compete or non-solicit obligations are being introduced here | Push back hard — see are non-competes enforceable. New restrictions at exit deserve separate payment |
| References | What the company will actually say when called | Agreed wording attached as an exhibit, and a named contact for enquiries |
| Benefits and equity | Health coverage end date, and what happens to vested and unvested equity | An extended exercise window for vested options — often granted, rarely offered |
| Characterisation of departure | Whether it is recorded as a resignation or a termination | It affects unemployment eligibility, so do not let this be traded away casually |
The equity point is worth dwelling on. Standard option plans give you 90 days after termination to exercise vested options, after which they lapse. If exercising is expensive — and it usually is, plus tax — a 90-day window can effectively destroy the value of years of vesting. An extension to twelve or twenty-four months costs the company nothing in cash and is one of the more winnable asks in the document.
What is genuinely negotiable
Almost everyone assumes the number is fixed and everything else is boilerplate. It is very often the reverse.
Asks that are frequently granted
- An extension of the deadline to consider it. Costs nothing, refused rarely.
- Agreed reference wording, attached to the agreement rather than promised verbally.
- A later official departure date, which can extend benefits and vesting.
- Employer-paid health coverage for a defined number of months.
- A longer post-termination window to exercise vested options.
- Mutual non-disparagement instead of one-way.
- Narrowing confidentiality so you can discuss the facts of your employment, not just the agreement.
- Removal or reduction of new restrictive covenants introduced at exit.
- Outplacement support, or the cash equivalent.
- Confirmation that you keep your laptop, phone number or personal files.
Ask in one consolidated message, in writing, and rank the items. Three to five requests with a short reason each reads as reasonable. Twenty reads as a refusal to settle, and the response will be worse than if you had asked for five.
Severance agreement template
The full clause structure, free to read — release scope, consideration, revocation period, confidentiality and references. Useful as a comparison against what you have been handed.
When to get an employment lawyer
The agreement itself will advise you to consult one, and for once that is not a formality. A consultation is often a fixed modest fee, and there are specific situations where the expected value of that hour is very high.
- You believe the termination was connected to your age, race, sex, disability, pregnancy, religion, or to a complaint you raised. The release is precisely what extinguishes those claims.
- You reported something — safety, fraud, harassment, accounting — before being let go. Retaliation claims are valuable and are exactly what a release ends.
- You are being asked to accept new restrictive covenants that would affect your ability to work.
- The amount is large, or a substantial part of it is equity, deferred or contingent on future conditions.
- You are over 40 and the 21 or 45-day period, the seven-day revocation window, or the group-layoff disclosures appear to be missing.
- You have a written employment contract with its own severance formula, which may already entitle you to more than you are being offered.
If the answer is no
Declining is a real option and the consequence is usually smaller than it feels. You keep your claims and forgo the payment; you still receive your earned wages, accrued leave where owed, and any benefits continuation rights you have independently. You remain eligible for unemployment on the ordinary criteria.
The reverse is the asymmetry worth holding on to. Signing is irreversible after the revocation window closes. Not signing keeps every option open, including signing a better version next week. If you are genuinely unsure, that asymmetry is the tiebreaker.
Sources
General information, not legal advice. This guide explains how these documents and rules generally work. Law varies by jurisdiction and changes, and none of it is applied to your circumstances here. For anything consequential, consult a licensed attorney where you are.
Frequently asked
How long do I have to sign a severance agreement?
If you are 40 or over and the agreement releases age discrimination claims, federal law requires at least 21 days to consider it, or 45 days where you are part of a group termination, plus 7 days after signing to revoke. If a material change is made to the offer, the consideration period restarts. Under 40, there is no federal minimum — but asking for a week is normal and almost always granted.
Can I negotiate a severance agreement?
Yes, and the non-cash terms are usually more movable than the number. Reference wording, benefits continuation, the departure date, the option exercise window, mutual non-disparagement and the scope of any new restrictive covenants are all routinely adjusted. Ask for three to five things in one written message, with a short reason for each.
What am I giving up by signing?
Ordinarily the right to bring any claim arising from your employment up to the date you sign — discrimination, harassment, retaliation, wrongful termination, wage claims, breach of contract. You keep the right to file a charge with the EEOC and cooperate with it, to claim workers' compensation and unemployment, to your vested retirement benefits, and to bring claims about anything that happens after you sign.
Will signing a severance agreement affect my unemployment benefits?
It can affect timing rather than eligibility. Many states treat severance pay as wages for the period it covers, which may delay when benefits start. Eligibility itself turns on the reason for separation, which is why how the departure is characterised in the agreement matters. State rules vary considerably here — check your own state agency's guidance before agreeing to a characterisation.
What happens if I do not sign?
You keep your legal claims and do not receive the severance payment. You are still owed earned wages and, in states that require it, accrued unused leave. Your independent benefits continuation rights are unaffected. Employers cannot withhold pay you have already earned to pressure you into signing — using a final paycheck as the inducement for a release is not permitted.