How to Review a Severance Agreement Before Signing
If your employer offered you a severance package after termination or layoff, do not sign it until you — or an employment lawyer — have reviewed every provision. Severance agreements are designed by the employer’s legal team to protect the company, not you. The payment you receive is consideration for waiving your legal rights, and in many cases the claims you are giving up are worth far more than the severance being offered.
What a Severance Agreement Typically Contains
Release of Claims
The most important provision in any severance agreement is the release of claims. By signing, you agree to waive your right to sue the employer for any claims arising from your employment or termination — including discrimination, harassment, wrongful termination, wage violations, FMLA interference, and retaliation. The release is usually drafted as broadly as possible to cover every conceivable legal theory.
An employment lawyer evaluates whether you actually have viable claims that the release would extinguish. If your termination was discriminatory or retaliatory, the value of those claims may be multiples of the severance being offered — and you would be giving them up for a fraction of their worth.
Severance Payment and Benefits
Review the payment amount, payment structure (lump sum vs. installments), and whether benefits like health insurance continuation, outplacement services, or accelerated vesting of stock options are included. Installment payments carry risk — the employer may stop paying and force you to enforce the agreement. Lump sum payments are generally preferable for employees.
Non-Disparagement Clause
Most severance agreements prohibit you from making negative statements about the employer. This can prevent you from discussing your experience with future employers, posting honest reviews on Glassdoor, or cooperating with other employees who have complaints. A well-negotiated agreement makes the non-disparagement mutual — the employer also agrees not to disparage you.
Non-Compete and Non-Solicitation Clauses
Some severance agreements include or reinforce non-compete restrictions that limit your ability to work for competitors for a specified period. Pennsylvania courts scrutinize non-competes for reasonableness in geographic scope, duration, and necessity. An employment lawyer can evaluate whether a non-compete is enforceable and negotiate narrower restrictions.
Confidentiality Provision
Confidentiality clauses prohibit you from disclosing the terms of the agreement, including the severance amount. These are standard but should be carefully reviewed to ensure they do not prevent you from discussing your legal rights, filing agency complaints, or responding to government investigations.
Cooperation Clause
Employers frequently include a requirement that you cooperate with ongoing or future litigation involving the company. This can require you to participate in depositions, provide testimony, and assist with legal matters — potentially for years after separation. Review whether the cooperation obligation includes compensation for your time.
Special Rules for Employees Over 40
The Older Workers Benefit Protection Act (OWBPA) imposes specific requirements on severance agreements that waive age discrimination claims under the ADEA. The waiver must specifically refer to ADEA rights and claims, you must be advised in writing to consult an attorney, you must be given at least 21 days to consider the agreement (45 days if the termination is part of a group layoff), you have 7 days after signing to revoke the agreement, and the agreement cannot waive claims that arise after the date of signing.
If your employer’s severance agreement does not comply with these requirements, the age discrimination waiver is invalid — meaning you can accept the severance payment and still pursue your age discrimination claim.
Red Flags in Severance Agreements
Watch for these warning signs. Pressure to sign quickly — if your employer is pushing you to sign immediately or giving you less than the legally required consideration period, they may be worried about the strength of your legal claims. Unusually broad release language — releases that extend to “any and all claims, known and unknown, from the beginning of time” may not be enforceable in their entirety. Clawback provisions — language that requires you to return the severance if you file a claim with the EEOC (note: employers cannot prevent you from filing EEOC charges, though they can waive your right to individual monetary relief). One-sided terms — if the non-disparagement, non-compete, and cooperation obligations only bind you and not the employer, the agreement is one-sided and should be renegotiated.
How an Employment Lawyer Reviews Your Severance Agreement
When you bring a severance agreement to the Lacy Employment Law Firm, your attorney evaluates the legal claims you may have and their approximate value, whether the severance offer is proportionate to those claims, each provision of the agreement for fairness and enforceability, opportunities to negotiate better terms (higher payment, narrower restrictions, mutual obligations), and whether the agreement complies with OWBPA and other legal requirements.
In many cases, having a lawyer review your severance leads to a significantly better outcome — either through renegotiation of terms or by identifying claims worth pursuing instead of accepting the package.
We serve employees across Philadelphia, Pittsburgh, and New Jersey.
If you have been offered a severance agreement, get it reviewed before you sign. Call (215) 515-5924 for a consultation.
