Severance Agreement Review Checklist: 12 Clauses to Check Before You Sign

A severance agreement is a short document that does a great deal. In exchange for a payment, you release every claim you have against the employer, agree to a set of continuing obligations, and accept a characterization of how your employment ended. Most people read the number and the signature line. The eleven clauses in between are where the value moves.

This checklist is the one the firm works through on every review. It is written for Ohio employees, it assumes you are reading the agreement yourself, and it links to the longer post on each item where there is one. The companion post on what to negotiate covers how to ask for changes once you know what to ask for.

1. The Payment: Amount, Timing, and Form

Confirm the gross amount, whether it is a lump sum or installments, when the first payment is due, and whether it is conditioned on anything beyond signing and not revoking. Installments paid as salary continuation can be cut off if the employer claims a breach, so a lump sum is generally safer. Check whether the amount is described as severance under a plan, in which case the plan document controls, or as a negotiated payment. Then ask whether it is the right number. Ohio benchmarks depend on tenure, level, and what the release is worth.

2. The Release: Scope and Carve-Outs

Read the release as a list of what you are giving up, because that is what it is. It will cover every claim through the date you sign, known or unknown, under every statute the drafter could name. Look for what is carved out: the right to file an agency charge, unemployment, workers' compensation, vested benefits, indemnification if your role carried it, and claims that arise after signing. If the release reaches claims the employer should not be buying this cheaply, such as a discrimination or retaliation claim you have actually raised, that is the negotiation.

3. OWBPA Compliance, If You Are 40 or Older

A release of age claims is valid only if it is written in plain language, refers specifically to the ADEA, does not cover claims arising after signing, is supported by consideration beyond what you were already owed, advises you in writing to consult a lawyer, gives you 21 days to consider it (45 for a group program), and gives you seven days to revoke after signing. A group program also requires a written disclosure of the ages and titles of those selected and not selected. Missing any of these means the age waiver fails. The seven requirements and the disclosure list each have a post.

4. Deadlines: Consideration and Revocation

Write down the date you received the agreement, the stated deadline to sign, the date you sign, and the date seven days later. Confirm that the first payment date falls after the revocation period. If you are under 40, the deadline is contractual and can be extended by asking. If you are 40 or older, a deadline shorter than 21 days is not enforceable and a missing revocation period is a defect. The 7, 21, and 45 day periods are explained in detail.

5. Non-Disparagement and Confidentiality

Check whether the non-disparagement obligation is mutual. A one-way clause binds you and leaves the employer free to say what it likes. Check what confidentiality covers: the terms of the agreement only, or the facts underlying your employment, which can prevent you from describing what happened to a future employer, a licensing board, or a court. Both clauses should carve out truthful statements to government agencies and testimony under subpoena. What these clauses actually do is a separate post.

6. Non-Compete, Non-Solicitation, and Reaffirmation

Many agreements reaffirm restrictive covenants you signed years earlier, and some add new ones. A reaffirmation revives an agreement you might otherwise have argued was stale or unsupported. A new non-compete in a severance agreement is supported by the severance payment and is harder to challenge than one signed at hire. This is the moment to narrow the restriction, because the employer is asking for your signature. Ohio enforces reasonable non-competes and narrows the rest, so plan around what a court would impose.

7. Characterization of the Separation and References

Does the agreement say you resigned, were terminated, or were laid off, and does that match what you want future employers to hear? A neutral reference clause should name the person who will respond to inquiries and limit the response to dates and title. If a specific manager is a risk, the clause should route inquiries away from them. The resignation versus termination question affects unemployment and legal position, not just appearances.

8. Unemployment

Look for a sentence stating that the employer will not contest your application for unemployment benefits. It costs the employer little and removes a fight you would otherwise have to win. If the agreement characterizes the separation as a resignation, this clause matters more, because a resignation without just cause is disqualifying in Ohio.

9. Benefits, Bonuses, Commissions, PTO, and Equity

Severance is separate from what you have already earned, and the agreement should say so. Check the treatment of accrued vacation under the employer's policy, any bonus for a completed period, commissions on sales already made, COBRA and whether the employer will subsidize it, and any unvested equity or deferred compensation. An agreement that is silent on these does not waive them, but a general release can reach a dispute over them, so get them resolved in writing before you sign.

10. Cooperation, Transition, and Return of Property

A cooperation clause obligates you to assist with litigation or transition after you leave, sometimes indefinitely and sometimes without pay. Limit it to reasonable times, require reimbursement of expenses and an hourly rate after a defined number of hours, and exclude anything adverse to your own interests. Return-of-property clauses should give you a chance to retrieve personal files and should not require you to certify something you cannot.

11. Repayment, Clawbacks, Breach, and Fees

Find the sentence that says what happens if you breach. Some agreements require repayment of the entire severance for any breach, add the employer's attorney fees, and allow the employer to stop installments on its own say-so. Ask for a materiality standard, notice and a chance to cure, and mutual fee-shifting so the obligation runs both ways. A repayment clause that can be triggered by a disputed Glassdoor review is not a term to accept as drafted.

12. Governing Law, Arbitration, Jury Waiver, and Entire Agreement

The entire-agreement clause means every promise made in the meeting that is not in the document is gone. If the manager said you could keep the laptop, that the reference would be glowing, or that the non-compete would not be enforced, it has to be in writing. Check the governing law and forum, especially if the employer is out of state, and check whether disputes under the agreement go to arbitration and whether you are waiving a jury. None of these is necessarily wrong, but each should be a choice rather than a surprise.

What to Send for a Review

If you decide to have the agreement reviewed, the materials that make the review useful are the agreement itself, the cover letter or email that came with it, any OWBPA disclosure list, any earlier agreement the severance reaffirms (non-compete, confidentiality, arbitration, commission plan, equity award), your most recent offer letter or employment agreement, and a sentence or two about why the employment ended. The deadline on the agreement is the first thing to state.

The Bottom Line

A severance agreement is a purchase of your release, and the twelve clauses above are the terms of sale. Read the money, the release, and the deadlines first, because those decide whether the agreement is worth signing at all. Then read the restrictions, the characterization, and the continuing obligations, because those decide what the agreement costs you after the money is spent. If anything on this list is missing, one-sided, or unclear, that is the item to raise, and the employer's answer will tell you how much room there is.

Frequently Asked Questions

What should I look for in a severance agreement before signing?

Twelve things, in roughly this order: the amount and timing of the payment, the scope of the release and its carve-outs, OWBPA compliance if you are 40 or older, the consideration and revocation deadlines, non-disparagement and confidentiality terms, any non-compete or non-solicitation restriction, how the separation is characterized, whether the employer will contest unemployment, what happens to benefits, bonuses, commissions, and equity, cooperation and return-of-property clauses, repayment and breach remedies, and the governing law, arbitration, and entire-agreement provisions.

Is a severance agreement negotiable?

Almost always. The first draft is the employer's opening position, and the amount, the reference language, the non-disparagement terms, the treatment of bonuses and equity, and the scope of any restrictive covenants are all routinely changed. The employer wants the release. Everything else is the price of it.

Do I need a lawyer to review a severance agreement?

Federal law requires the agreement to advise employees 40 and older in writing to consult a lawyer, which tells you what Congress thought. A review is useful whenever the release covers a claim you might have, the agreement contains a non-compete or clawback, or the amount is large enough that a few percentage points of negotiation pay for the review several times over. For a routine layoff with a small payment and no claims, the checklist on this page may be enough.

What rights cannot be waived in a severance agreement?

The right to file a charge with the EEOC or a state agency and to participate in its investigation, the right to unemployment benefits, workers' compensation rights, vested retirement benefits, and claims that arise after you sign. An agreement can require you to waive any personal recovery from an agency charge, which is different from waiving the right to file one.

What is a clawback clause in a severance agreement?

A provision that requires you to repay some or all of the severance if you breach the agreement, usually the confidentiality, non-disparagement, or non-compete terms. Some clawbacks are triggered by any breach however minor, some require repayment of the entire amount, and some add the employer's attorney fees. The clause is negotiable, and narrowing it to material breaches with notice and a chance to cure is a standard request.