What to Do Before You Sign a Severance Agreement

What should you do before signing a severance agreement?

Do not sign it the day you receive it. A severance agreement is a permanent trade (money now in exchange for every legal claim you had against the employer as of the date you sign, including claims you do not yet know you have), so the four things worth doing first are: get the deadline extended in writing, find out what the release actually covers, confirm the money is more than wages you were already owed, and price the claims before you give them up.

That sequence matters because only one step in this process is irreversible. Everything else can be revisited. Your signature cannot.

Why does signing quickly cost you money?

Because the document is usually handed to you in the same meeting where you learn you are losing your job, and that is the worst possible condition under which to evaluate a contract. You are absorbing bad news, thinking about rent, and reading twelve pages of defined terms. The employer’s counsel drafted the document weeks earlier, without any of that pressure.

The deadline printed on the last page also does more work than it deserves. Employees read “you must return this by Friday” as a legal rule. It is a negotiating posture. In most cases the employer would rather have a signed release two weeks late than no release at all.

How much time are you entitled to?

That depends on your age and on what the agreement releases.

If you are 40 or older and the agreement waives age discrimination claims, the federal Older Workers Benefit Protection Act sets a floor: at least 21 days to consider the agreement, at least 45 days if severance is being offered to a group or class of employees as part of a layoff or exit incentive, and 7 days after signing during which you can revoke. Group offers must also disclose the job titles and ages of everyone selected and not selected. That disclosure list is frequently where an age discrimination case begins. It is a snapshot of who the company decided to cut.

If you are under 40, no federal minimum applies. The deadline is whatever the employer wrote, which is exactly why asking for more is reasonable.

Separately, New York restricts nondisclosure terms in agreements resolving discrimination, harassment, or retaliation claims, and attaches its own consideration period and revocation right to those terms.

How do you ask for more time without creating a problem?

In writing, briefly, and without arguing the merits. Something close to:

Thank you for sending this. I’d like to review it with counsel before responding. Can you confirm an extension to [date]?

That is the entire message. Do not explain your legal theory, do not say the termination was unfair, and do not say you understand the decision. Statements made in an exit meeting have a way of resurfacing, and there is no version of this conversation where saying more helps you.

If the employer refuses an extension outright, that refusal is itself information. Employers who are confident in their paperwork usually grant the extra week.

What should you gather before you can evaluate the offer?

You cannot judge whether a number is fair without the documents that establish what you were owed and what happened. Collect these before your system access is cut off:

• Your offer letter, employment agreement, and any arbitration agreement, non-compete, or non-solicitation clause you ever signed
• The employee handbook and any written severance plan or policy
• Your commission plan, bonus plan, and equity grant documents
• Performance reviews going back as far as you can reach
• Any complaint you made to HR or a manager, and the response
• Pay stubs and wage statements
• The termination notice and the severance agreement itself

Forward what you need to a personal email account. Do not take confidential company data, client lists, or trade secrets. That hands the employer a defense and, occasionally, a counterclaim.

Then write a timeline while it is fresh: dates, who said what, who was in the room. Memory degrades fast, and every detail will be tested later.

What questions should you ask about the release itself?

Four, in this order.

What does it release? Standard releases are drafted as broadly as the law allows: known and unknown claims, under every federal, state, and local statute the drafter can name. If you were fired for an illegal reason, if you were punished for reporting something, or if you are owed overtime or commissions, your signature ends those claims even though nobody mentioned them.

Is the money new? A release requires consideration: something of value you were not already entitled to receive. Your final paycheck and vacation payout, earned commissions, and vested benefits are already yours. If the “severance” is really your own earned wages relabeled, the employer is trying to buy your claims with your money.

What else does it impose? Look past the payment paragraph for confidentiality, non-disparagement, cooperation obligations, non-competes, and clawbacks. A cooperation clause with no cap can obligate years of unpaid assistance in litigation you have no stake in.

What is the payment timing? Under New York State Department of Labor rules, severance that starts within 30 days of your last day and exceeds the maximum weekly unemployment benefit rate can make you ineligible for benefits during the weeks it covers; payments beginning more than 30 days out generally do not. That makes the payment schedule a term with real dollar value, and it is usually easy to move.

What is negotiable besides the dollar amount?

Most of it, and the non-monetary terms are often the easiest to win because they cost the employer little:

• Employer-paid COBRA premiums for a set number of months
• Whether the separation is characterized as a layoff or a resignation
• A neutral reference with agreed language and a named contact
• Release or narrowing of a non-compete or non-solicit
• Accelerated vesting or an extended window to exercise equity
• Mutual rather than one-way non-disparagement
• Payment timing structured around unemployment eligibility
• Reimbursement of your attorneys’ fees for the review

What moves the money is different: a documented claim, close timing between a complaint and your termination, comparators who kept their jobs, a defect in the employer’s own paperwork, or unpaid wages carrying statutory liquidated damages and fees. What does not move it (how unfair the decision felt, how long you worked there, how much you need the money) is real, but it does not change the employer’s risk calculation, and building a demand around it weakens the demand.

What are the most common mistakes?

Signing in the meeting. Nothing good comes from it.

Assuming a bad clause is unenforceable and signing anyway Some terms are void in New York. General releases of discrimination, retaliation, and contract claims are not, when the requirements are met.

Not filing for unemployment Applying waives nothing and being fired does not automatically disqualify you.

Deciding there is no claim without checking Misclassified overtime, forfeited commissions, and layoff selection patterns are invisible from where you are standing.

Waiting until the revocation period closes to get advice. Once it does, your leverage is gone.

Where to go from here

If you are holding an agreement with a deadline on it, the useful next step is a read of the release against your actual facts, contracts, and pay records: what it covers, whether the offer is more than you were already owed, and what a realistic counter looks like. Our severance review and negotiation practice does that for employees and executives.

Before that conversation, our severance agreement checklist walks the questions above and produces a list of the ones that apply to you. It never sees your agreement, so do not paste any part of it in; working through the questions is simply a faster way to arrive at the call knowing what to ask.

Tell us what happened before you sign. The case evaluation is free and confidential.