You've just been told your position is being eliminated. Your employer hands you a severance agreement and tells you to sign by the end of the week. It feels like a formality, a fair exchange for some money to soften the landing. But severance agreements are legal contracts, and signing one without understanding what you're giving up can be a costly mistake.
Here is what you need to know before you put pen to paper.
What a Severance Agreement Actually Is
A severance agreement is a contract between you and your employer. In exchange for a payment, you agree to release legal claims against the company. That release is the most important part of the document, and it is almost always written as broadly as possible to protect the employer.
In practical terms, this means that once you sign, you typically cannot sue your employer for wrongful termination, discrimination, harassment, retaliation, or any other employment-related claim. You are trading your legal rights for the severance payment. Whether that is a good trade depends entirely on the facts of your situation.
You Have More Time Than You Think
Employers often create a sense of urgency around severance agreements, but the law gives you meaningful time to review them. If you are 40 or older, federal law requires that you be given at least 21 days to consider the agreement, and 7 days to revoke it after signing. For group layoffs, the review period extends to 45 days.
If you are under 40, there is no federally mandated review period, but that does not mean you have to sign immediately. Use whatever time you have. An agreement signed under pressure, without legal review, is still binding.
The employer's deadline is almost always negotiable. Asking for more time to review rarely costs you the agreement, and the extra days can be invaluable.
What to Look for in the Agreement
Severance agreements vary significantly, but there are several provisions that deserve close attention in every case.
The release of claims
This is the core of the agreement. Read it carefully. Does it cover only claims related to your employment, or does it extend further? Does it include claims you may not even be aware of yet? A broad release can waive rights you did not know you had.
Non-disparagement clauses
Many agreements prohibit you from making negative statements about the company, its leadership, or its products. Consider whether this limits your ability to tell your story, provide references, or speak honestly with future employers.
Non-compete and non-solicitation provisions
Some severance agreements include or extend non-compete restrictions that limit where you can work next. In Ohio, these provisions are enforceable if they are reasonable in scope and duration. Make sure you understand exactly what you are agreeing to before you accept restrictions on your ability to earn a living.
Confidentiality
You may be agreeing to keep the terms of your separation, including the payment amount, confidential. Understand what this means for conversations with your spouse, your accountant, or future employers.
Benefits and equity
Does the agreement address what happens to your health insurance, accrued vacation, stock options, or retirement contributions? Make sure nothing is being left on the table.
Is the Severance Amount Fair?
There is no legal requirement in Ohio that employers offer any particular amount of severance. But there are factors that affect what is reasonable given your circumstances, including your tenure, your salary, the circumstances of your termination, and whether you have viable legal claims.
If you were terminated under circumstances that could support a legal claim, such as discrimination, retaliation, or a violation of your employment contract, that changes the calculus significantly. A severance offer made to someone with strong legal claims may be far below what they could recover. An employment attorney can help you assess what your claims might be worth before you accept a number.
When You Should Not Sign
There are situations where signing a severance agreement, at least without negotiation or legal advice, is clearly the wrong move. These include:
- You believe you were terminated because of your race, sex, age, disability, religion, or national origin
- You were fired shortly after taking FMLA leave, filing a workers' compensation claim, or reporting misconduct
- You have an employment contract that entitles you to more than what is being offered
- The non-compete provisions would significantly restrict your ability to find comparable work
- You are being asked to waive claims you have not had time to fully evaluate
In any of these situations, signing without legal counsel could mean giving up significantly more than you are receiving. Learn more about the employment law services we offer at Sobel Law Solutions.
Negotiation Is Normal
Most employees assume that severance agreements are take-it-or-leave-it. They are not. Employers negotiate severance terms regularly, and making a counteroffer does not typically result in the offer being pulled. Common areas for negotiation include the payment amount, the length of any non-compete, the scope of the release, outplacement services, and the characterization of your departure.
An employment attorney can help you identify what is negotiable, what your leverage is, and how to approach the conversation without jeopardizing the deal.
You do not have to navigate this alone. A single consultation before you sign can save you from a decision you cannot undo.
The Bottom Line
A severance agreement is not a favor from your employer. It is a business transaction, and your employer has legal counsel that drafted it in their interest. You deserve the same clarity about yours. Initial consultations are free, and the review period means there is almost always time to get advice before you commit.
Received a Severance Agreement?
Do not sign until you understand what you are giving up. Let's talk through your situation.
Schedule a Free Consultation