Severance Agreement Checklist

Under 29 U.S.C. 626(f)(1)(D) an ADEA waiver is valid only where the consideration is "in addition to anything of value to which the individual already is entitled". 29 C.F.R. 1625.22(d)(3) goes further and says a benefit taken away in contravention of law or contract and then re-offered is not valid consideration either. Even outside the age context, the same question decides whether the trade is worth making.

A New York wage claim can reach back six years under NYLL 198(3) and can carry liquidated damages of 100 percent of the unpaid wages, so an unpaid overtime claim released without being priced can be worth far more than the severance. Whether federal wage claims can be released privately at all is contested. Cheeks v. Freeport Pancake House holds that in the Second Circuit a filed FLSA claim cannot be settled by private stipulated dismissal without court approval, and the Fifth Circuit has gone the other way, so this is a question to ask rather than an assumption to make.

Continuation coverage is a real cost that is frequently left out of the headline figure, and it is negotiable in a way the base severance number sometimes is not. It also sits outside "dismissal pay" for New York unemployment purposes under NYLL 591(6)(b), which excludes payments for health insurance.

Under 29 U.S.C. 626(f)(1) a waiver of age claims must, at a minimum, be understandable, refer specifically to ADEA rights, not waive rights arising after signing, be supported by extra consideration, advise you in writing to consult an attorney, give at least 21 days to consider (45 if the offer went to a group or class), and allow at least 7 days to revoke after signing.

29 C.F.R. 1625.22(f)(1)(iii)(B) says a "program" exists once the offer goes to two or more employees, which triggers the 45-day period and the disclosure under 29 U.S.C. 626(f)(1)(H)(ii) of "the job titles and ages of all individuals eligible or selected for the program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected". Those disclosures are due at the start of the consideration period, not at signing, and the list is often the clearest evidence of whether a layoff selected by age.

29 U.S.C. 626(f)(1)(G) requires at least 7 days to revoke, and 29 C.F.R. 1625.22(e)(5) states plainly that "The 7 day revocation period cannot be shortened by the parties, by agreement or otherwise". By contrast the 21 or 45 day consideration period can be cut short by signing early, but only where that choice is knowing and voluntary and was not induced by a threat to withdraw the offer or by offering better terms for signing early.

29 C.F.R. 1625.22(e)(6) treats an early signature as valid only where it was not induced "through fraud, misrepresentation, a threat to withdraw or alter the offer prior to the expiration of the 21 or 45 day time period, or by providing different terms to employees who sign the release prior to the expiration of such time period". Separately, asking for more time in writing costs nothing and is granted far more often than employees expect.

A general release is a permanent trade of everything you had as of the signing date. The point of a review is not to manufacture a lawsuit, it is to make sure the number is priced against what is being released. Employees routinely release claims they did not know they had, such as unpaid overtime from a misclassified role or evidence buried in a layoff selection list.

29 U.S.C. 626(f)(4) provides that "No waiver may be used to justify interfering with the protected right of an employee to file a charge or participate in an investigation or proceeding conducted by the Commission", and 29 C.F.R. 1625.22(i)(3) bars "any provision imposing any condition precedent, any penalty, or any other limitation" on that right. Note the limit the EEOC itself draws: the right to file is not waivable, but the right to a personal monetary recovery generally is.

29 U.S.C. 216(c) permits waiver of FLSA claims on payment supervised by the Secretary of Labor. Cheeks v. Freeport Pancake House holds that in the Second Circuit a filed FLSA claim cannot be resolved by private stipulated dismissal without court approval, describing the FLSA as "a uniquely protective statute", although the Fifth Circuit reached the opposite result in a union-negotiated case. New York has no statute requiring approval of a NYLL release, so the two are not on the same footing.

New York Workers Compensation Law 32 provides that "No agreement or release except as otherwise provided in this chapter by an employee to waive his right to compensation under this chapter shall be valid", and a settlement does not bind unless the Board approves it. NYLL 595(1) provides that "No agreement by an employee to waive his rights under this article shall be valid" for unemployment insurance. ERISA at 29 U.S.C. 1056(d)(1) protects vested pension benefits from assignment or alienation, although that protection is about vested pension benefits and does not extend to severance benefits under a welfare plan.

A no-rehire clause covering a large corporate group can quietly close off a sector. Separately, New York Workers Compensation Board guidance states it will not approve a settlement requiring the claimant to resign and not re-apply, so a standard no-rehire clause can obstruct approval of a comp settlement.

N.Y. General Obligations Law 5-336(1)(a), as amended effective 17 November 2023, provides that an employer has no authority to include a term preventing disclosure of the underlying facts of a claim involving discrimination, harassment, or retaliation "unless the condition of confidentiality is the complainant’s preference". Where confidentiality is your preference it must be memorialised in an agreement signed by all parties, you have up to 21 days to consider the term, and you have at least 7 days after signing to revoke.

N.Y. General Obligations Law 5-336(2) applies to any agreement entered on or after 1 January 2020 and is not limited to agreements resolving a claim. Any provision preventing disclosure of factual information related to a future discrimination claim is void and unenforceable unless it notifies the employee, potential employee, or independent contractor that it does not prohibit them from speaking with law enforcement, the EEOC, the State Division of Human Rights, the Attorney General, a local commission on human rights, or an attorney they have retained.

N.Y. General Obligations Law 5-336(3), added in 2023, provides that no release of a claim whose factual foundation involves unlawful discrimination, harassment, or retaliation is enforceable if the complainant is required to pay liquidated damages for breach of a nondisclosure or nondisparagement clause, is required to forfeit all or part of the consideration for such a breach, or is required to make any affirmative statement that they were not in fact subject to unlawful discrimination. The statute contains no severability carve-out.

General Obligations Law 5-336(3)(c) is explicit that a release is unenforceable if it "contains or requires any affirmative statement, assertion, or disclaimer by the complainant that the complainant was not in fact subject to unlawful discrimination, including discriminatory harassment, or retaliation".

A one-way non-disparagement clause is a common and usually negotiable asymmetry. Note also that the National Labor Relations Board held in McLaren Macomb that merely offering a severance agreement with broad confidentiality and non-disparagement terms can violate Section 8(a)(1) where it has a reasonable tendency to interfere with Section 7 rights, which protect non-supervisory employees. That decision is current Board law but its enforcement guidance was rescinded in 2025 and a Board majority has said it would consider revisiting it, so treat it as a point of leverage rather than a settled entitlement.

17 C.F.R. 240.21F-17(a) provides that "No person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement". The SEC has charged employers over severance agreements that purported to waive employees’ rights to whistleblower awards, so a permission to report combined with a waiver of the award is not a safe harbour.

New York has no statewide non-compete ban. The 2023 bill was vetoed in December 2023 and the successor bill passed the Senate in June 2025 without being enacted. Enforceability remains judge-made. The New York Attorney General states that a non-compete is enforceable only to the extent it is necessary to protect the employer’s legitimate interests, does not impose an undue hardship on the employee, does not harm the public, and is reasonable in time and geographic scope. The FTC rule that would have banned most non-competes is not in effect and is not enforceable, the FTC having acceded to its vacatur in September 2025.

Reference terms are among the most commonly granted requests in a severance negotiation and among the least commonly asked for. Naming the individual who will give the reference matters as much as agreeing the wording, because a policy of confirming dates only is worth little if the hiring manager calls your former supervisor instead.

An unlimited cooperation clause can bind you for years without compensation. It also sits uncomfortably next to the rule that you cannot be prevented from participating in an agency investigation, so the two clauses should be read against each other.

Equity terms almost always live in a separate plan document that the severance agreement does not repeat, and the release may nonetheless extinguish any claim about them. Vested options with a short post-termination exercise window can be worth more than the severance and can expire while the agreement is under review.

Bonus and commission disputes are ordinary contract claims and in New York a contract claim generally carries six years, so an unaddressed amount is frequently a live claim being released for nothing. Earned commissions may also be wages under the New York Labor Law, which brings a different and more favourable set of remedies.

NYLL 591(6)(a) withholds benefits for a week in the dismissal period where weekly dismissal pay exceeds the claimant’s maximum weekly benefit rate plus the partial benefit credit. But NYLL 591(6)(d) provides that the subdivision "shall not apply during any weeks in which the initial payment of dismissal pay is made more than thirty days from the last day of the claimant’s employment". Whether this helps you depends on the amounts and on your own eligibility, so it is a question to raise rather than a plan to adopt unadvised.

NYLL 595(1) provides that "No agreement by an employee to waive his rights under this article shall be valid", and General Obligations Law 5-336(1)(c)(ii) voids any confidentiality term restricting you from disclosing facts necessary to receive unemployment insurance or other public benefits. So a clause purporting to affect your eligibility is unenforceable, but a promise not to contest is still worth having.

The purpose of a review is to make sure the number reflects what you are giving up, and you cannot know that until someone has read the release against your facts. Separately, the statutory deadlines for those claims are running independently of the severance deadline and some of them are short. The filing deadline checker on this site sets them out.

29 U.S.C. 626(f)(1)(E) requires that the individual "is advised in writing to consult with an attorney prior to executing the agreement" for an ADEA waiver to be knowing and voluntary. Under 29 U.S.C. 626(f)(3) the burden of proving the waiver was knowing and voluntary is on the party asserting it, which is the employer.