A severance agreement can determine far more than the amount of the final payment. Employers commonly require a broad release of legal claims in exchange for severance and may also include confidentiality, non-disparagement, cooperation, restrictive-covenant, return-of-property, tax, and other obligations. Employees should understand both the value being offered and the rights being surrendered before signing.
Review Before You Sign
Fidlon Legal reviews severance agreements for employees and advises whether the proposed consideration is reasonable in light of tenure, compensation, benefits, bonus or commission rights, potential legal claims, restrictive covenants, and the circumstances of separation. Where appropriate, we negotiate for improved economic and non-economic terms.
Terms That Often Deserve Attention
- Severance amount and payment timing — lump sum versus salary continuation, payment dates, and conditions.
- Bonus, commission, equity, PTO and benefits — whether earned or contingent compensation is included and how benefits or COBRA are handled.
- Release of claims — the scope of federal, state, local, contract, tort, and other claims being waived.
- ADEA/OWBPA provisions — employees age 40 and older may have additional statutory requirements for a valid age-claim waiver.
- Confidentiality and non-disparagement — who is bound, what statements are prohibited, and what legally protected communications remain permitted.
- References and announcements — agreed language for employment verification, internal or external communications, and LinkedIn or biography issues.
- Non-compete, non-solicitation and confidentiality restrictions — whether existing restrictions are reaffirmed, modified, or newly imposed.
- Cooperation obligations — the scope, duration, scheduling, reimbursement, and compensation for future assistance.
- Return of property and information — practical requirements and certifications concerning devices, documents, and company information.
- Tax and indemnification provisions — allocation of tax responsibility and any unusual repayment or indemnity language.
Negotiating Severance
Negotiation is most effective when grounded in leverage. That may include potential discrimination, retaliation, leave, wage, contract, bonus, commission, or other claims; the employee's tenure and performance history; transition needs; the employer's desire for a release; and market or internal severance practices. Not every case supports a larger payment, but legal review can identify issues that are easy to miss when the agreement is considered only as a dollar amount.
If you have received a severance agreement, do not assume the employer's first proposal is necessarily its final position. Fidlon Legal offers paid severance consultations and, where appropriate, negotiation representation.