What You're Actually Signing
You are being handed a document at the worst possible moment for reading one carefully, by people who would prefer you signed it quickly.
A severance agreement is a legal contract and reviewing one is a lawyer's work, not mine. Employment law also varies significantly by state. This is what the parts are called and which questions to ask — so that an hour of legal review is spent efficiently rather than spent explaining the basics.
The meeting lasts eleven minutes. Somewhere in it you are handed a folder, told the terms are standard, and given a date by which to return it signed.
Almost nothing about that moment is designed to help you read carefully. So read it later, read it twice, and know what you are looking at.
The money is only one part of it
The severance payment. How much, and — this matters more than people expect — how it is paid. A lump sum and salary continuation are different things: they can land in different tax years, and they can affect unemployment benefits differently depending on your state.
Accrued but unused paid time off. Whether this must be paid out is a state-law question, not a company-policy question, in many places.
The final paycheck, including any commission or bonus already earned. Bonus language is where money quietly disappears — look for whether you must be "employed on the payment date."
Equity. If you have unvested shares or options, the agreement and the equity plan together decide what happens. Check the exercise window on vested options. It is often short — sometimes ninety days after departure — and it is one of the most expensive things people miss.
What you are giving up
This is the part that is actually being bought.
A release of claims. You are generally agreeing not to sue over anything that happened during employment. That is the ordinary trade, and for most people it is a reasonable one — but it is worth knowing it is the trade.
Non-disparagement, often mutual, sometimes not. If it only binds you, that is worth noticing and is sometimes negotiable.
Confidentiality about the agreement itself.
Non-compete or non-solicit terms, which may be new or may be restating something you signed at hire. Enforceability varies enormously by state and has been shifting. Do not assume a clause is enforceable, and do not assume it is not.
The deadlines are real, and one of them protects you
Severance agreements carry dates, and unlike most of what arrives in a crisis these are genuine.
If you are 40 or older, federal law gives extra protection when you are asked to release age-discrimination claims: generally at least 21 days to consider the agreement — 45 if it is part of a group layoff — and 7 days to revoke after signing. That revocation period cannot be waived.
If you are being pushed to sign a release in an afternoon and you are over 40, something is wrong with the process. Take the time you are entitled to.
Is it negotiable
More often than people assume, and less often than the internet suggests.
What is most commonly moved: the amount, the end date of benefits, the reference and how the departure is described, outplacement support, and the equity exercise window. What is rarely moved: the release itself.
The tone that works is not adversarial. I want to sign this. Before I do, I have two questions and one request. Then have exactly two questions and one request.
Before you sign, four questions
- Does this affect my unemployment claim, and when should I file? State-dependent, and the answer changes your cash timing.
- What happens to my health coverage, and on what date exactly? The coverage question has its own short clock.
- What is the exercise window on anything vested?
- Is there anything in here I did not already agree to at hire?
When to pay for an hour
If the agreement includes a non-compete, if you are over 40, if you believe the departure involved discrimination or retaliation, if the sums are significant, or if you simply do not understand a clause — pay an employment lawyer for a single review.
One hour, with a specific list of questions, is a very different purchase from an open-ended engagement. Many will do a flat-fee review.
What this article deliberately does not do
It does not tell you whether to sign, whether your terms are fair, or whether any clause is enforceable where you live. That is legal advice about a specific contract, and it is not mine to give.
What it does is make sure you know which parts are money, which parts are rights, and which dates are real — before the eleven minutes turn into a signature.