Before you sign a severance agreement

Severance agreements tend to arrive at the worst possible moment: on the day you are told your role is ending, with a deadline attached. The instinct is to sign quickly and move on. Resist it. In our experience, the first offer is almost never the best one available, and the terms buried in the release can matter more than the headline number.

Understand what you are being paid for

Severance is not a gift. In nearly every case it is consideration for something you are giving up, usually your right to bring legal claims against the company. That is why the agreement includes a general release. The question to ask is whether the payment fairly reflects what you are releasing, including any claims you may not yet have considered.

If you are over 40, federal law gives you at least 21 days to consider the agreement, or 45 days in a group layoff, plus seven days to revoke after signing. Use that time.

Six things to check before signing

• Equity: what happens to unvested options or RSUs, and how long you have to exercise vested options.
• Bonus and commission: whether earned but unpaid amounts are paid separately from severance.
• Restrictive covenants: whether the agreement adds or extends a non-compete or non-solicit.
• Health coverage: whether the company subsidises COBRA premiums, and for how long.
• Non-disparagement: whether it is mutual, and who at the company it binds.
• Reference and announcement: agreed language for how your departure is described.

The headline number gets the attention. The clauses decide what your next two years look like.

Where leverage comes from

Companies offer severance because they want certainty. Your leverage grows with anything that makes the release more valuable to them: a potential discrimination or retaliation claim, a recent complaint you raised, unpaid wages, a contract that promised more, or simply your knowledge of the business and its people.

In Massachusetts, the Wage Act adds another lever. Earned commissions and accrued vacation must be paid on your last day, and failure to do so carries automatic treble damages. Employers know this, and it often shifts the conversation.

Negotiation does not have to be adversarial. Most of our severance work is resolved quietly, through a few calls with in-house counsel. But it should be informed. A one-hour review before you sign is a small investment against an agreement you cannot undo.