When ending an employment relationship, your employer may offer you a severance agreement. What is this agreement? Should you accept a severance agreement? What does signing a severance agreement mean?
The Crone Law Firm, serving Tennessee, Arkansas, Missouri, Illinois, and Kansas workers, knows Employment Law and how to advise clients about workplace disputes and contracts, including severance agreements. Let’s explore severance agreements and what signing one means for you.
What is a Severance Agreement?
A severance agreement is a legal contract between an employer and an employee that outlines the terms of the employee’s departure from the company. It typically includes details on the employee’s severance pay, benefits continuation, and other conditions under which the employee agrees to leave the company.
The purpose of a severance agreement is to protect both the employer and the employee by providing clear expectations and avoiding any potential legal disputes after the employee leaves the company. Your employer is not obligated under the law to offer a severance agreement.
Why Am I Offered a Severance Agreement?
There could be several reasons why your employer would offer you a severance agreement. One of the main reasons could be that they are undergoing a restructuring process or downsizing their workforce. In such situations, the company may offer severance packages to employees who are being laid off as a way of softening the blow and helping them transition to a new job.
Another reason could be that your employer seeks to avoid legal disputes or lawsuits. By offering a severance agreement, the company can protect itself from any legal action that may arise from terminating your employment.
A severance agreement may also be offered to reward long-serving employees who are leaving the company voluntarily. Ultimately, the specific reasons for your employer offering you a severance agreement will depend on your individual circumstances and the policies of your company.
Can I Negotiate the Terms of a Severance Agreement?
You have every right to negotiate the terms of a severance agreement. It’s important to remember that this is a legally binding contract, so it’s in your best interest to thoroughly review and understand the terms outlined in the agreement. Once you’ve done that, you can then begin the negotiation process. Everyday items you may wish to negotiate include:
- Severance Pay
- Insurance Coverage
- Paid Time Off
- Stock Options
- Placement Assistance
- Company Perks
Be sure to approach the negotiation professionally and respectfully, and consider enlisting the help of a seasoned Employment Law Attorney from The Crone Law Firm for advice or counsel. We can help you negotiate and structure contract terms to protect your rights and interests. Ultimately, we aim to help you form a mutually beneficial agreement that works for you and your employer.
What Happens if I Sign a Severance Agreement?
Signing a severance agreement can have various consequences depending on the terms of the contract. Usually, by signing a severance agreement, you are agreeing to waive your rights to sue your employer for any claims related to your employment or termination. You may also be agreeing to keep the terms of the agreement confidential. In return, you may receive a severance payment, continued benefits, or other perks.
It is essential to carefully review the agreement and consult with an attorney from The Crone Law Firm before signing to ensure that you understand the terms and are making an informed decision.
If your job ends and a severance agreement is being offered, call or message us online and ask for a legal review of the contract. We can help you understand your rights and how to work with your employer to construct an agreement that gives you the best chance of success moving forward.
What’s New in Severance Agreements
In 2025, severance agreements continue to evolve as employment laws and enforcement priorities shift across the United States. The biggest changes relate to non-disparagement clauses, confidentiality terms, and waivers of claims.
The National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEOC) have recently issued guidance clarifying that employers cannot use severance agreements to restrict employees from discussing workplace conditions or filing complaints with government agencies. This means that overly broad clauses limiting speech or future claims may now be unenforceable.
Additionally, several states including California, Illinois, and New York have passed laws requiring employers to provide clear notice of rights, revocation periods, and sometimes additional compensation when employees sign a release of claims. Even if you’re outside those states, these developments influence how employers draft agreements nationwide.
For employees, this means it’s more important than ever to review your severance agreement with an employment attorney before signing. A lawyer can help ensure your rights are protected and that the agreement complies with current 2025 standards.
FAQs
Can I negotiate the terms of a severance agreement?
Yes. You can often negotiate payment amounts, benefits continuation, or removal of restrictive clauses. Having legal counsel helps identify where you have leverage.
Are non-disparagement clauses still allowed?
Yes, but only if written narrowly. Broad clauses that prevent you from discussing workplace conditions or filing agency complaints may violate current labor laws.
How long do I have to review a severance agreement?
For employees over 40, federal law typically allows 21 days to review and 7 days to revoke after signing, under the Older Workers Benefit Protection Act. Employers may voluntarily offer similar timeframes to all employees.
Can I still collect unemployment benefits if I accept severance pay?
In many cases, yes. But it depends on how your state calculates benefits. Some states temporarily delay unemployment if severance is paid as salary continuation.
Should I sign without a lawyer reviewing it?
It’s not recommended. A short review can help identify clauses that may affect future job opportunities or legal rights.