What to ask for before you sign a severance agreement
Severance is not required by federal law in most cases, so whatever you are offered comes from your employer's policy, your contract or the agreement you are handed. The most useful step is to treat the offer as a document you can read, question and sometimes negotiate, rather than a deadline to beat. Terms vary by employer and by state, so check the details with the official sources linked below and consider an employment lawyer for anything unclear.
What does a severance agreement usually include?
Most agreements bundle money with legal terms. Read for each of these:
- Payment: the amount, whether it is a lump sum or paid over time, and the date it starts.
- Release of claims: a promise not to sue the employer over your employment or its end. This is usually the main thing you give up.
- Benefits: whether the employer pays any part of health coverage after your last day, and for how long.
- Restrictions: confidentiality, non-disparagement, non-compete or non-solicitation terms that may limit what you do next.
- Conditions: returning equipment, final work handoffs or a requirement to stay through a set date.
Do I have to sign right away?
No. Ask in writing how long you have to decide, and get the full agreement rather than a summary. Do not rely on a verbal promise about anything that matters to you, because the signed document is what counts.
If you are 40 or older, federal rules add protection. The EEOC's guidance on severance waivers explains that a valid waiver of age discrimination claims under the Older Workers Benefit Protection Act generally must give you at least 21 days to consider the offer, or 45 days if it is part of a group layoff program, and 7 days after signing to revoke. Read the EEOC page for the full list of requirements, since other conditions also apply.
What can I ask for or negotiate?
Employers do not have to agree, but these are common asks:
- More time to review, especially if the agreement is long.
- A clearer payment schedule, or a lump sum instead of installments.
- Health coverage help, such as paying part of the COBRA premium for a set period. See health insurance after a layoff: COBRA vs Marketplace.
- A neutral reference or an agreed statement about why you left.
- Narrower restrictions, such as a shorter or more specific non-compete.
- Written confirmation of final pay and accrued time off, which your state may require separately from severance.
Ask for changes in writing and keep the replies. Your leverage is usually greatest before you sign.
Will signing affect my unemployment benefits?
It can depend on your state and how the payments are structured, so do not assume either way. Some states treat severance as income that affects weekly benefits, and others do not. Check with your state agency before you sign, and file your claim promptly regardless. Our guide to unemployment insurance after a layoff covers the basics, and the Department of Labor's unemployment page points to your state program.
Was I owed advance notice instead?
Some larger employers must give 60 days' notice of mass layoffs or plant closings under the federal WARN Act, and some states have their own rules. Pay or notice you receive under those rules is separate from a voluntary severance offer, and a release should not quietly waive rights you did not know about. Read how to read a WARN notice and see recent filings on our WARN page.
Is my company likely to cut more jobs?
Public companies disclose many workforce reductions in SEC filings. The guide to SEC 8-K Item 2.05 explains what they say. You can check a company or browse the live layoff feed.
What to watch
Three things matter most: the deadline to accept, what you are releasing, and what happens to your health coverage and unemployment claim. Write each date down, ask every question in writing, and get tax questions answered by a tax professional, because severance is generally taxable and withholding can differ from what you expect. This article is general information, not legal advice.