Severance agreements are almost always negotiable. Before you sign, you should know what claims you are waiving, what restrictions you are agreeing to, and how much leverage you actually have.
A severance agreement is a contract. In exchange for a severance payment, the employer asks you to waive claims, agree to confidentiality and non-disparagement terms, and often to comply with non-compete or non-solicit obligations. The waiver typically covers every legal claim you have against the employer, whether you know about it or not. Once signed, those claims are gone.
The review process above is shaped by a layered statutory and regulatory framework. The most consequential rules govern ADEA waivers, the NLRB's scrutiny of broad confidentiality and non-disparagement provisions, and the Ohio common-law doctrines of formation, duress, and unconscionability. Knowing which rules apply to which provisions is what separates a routine signing from a meaningful negotiation.
For employees aged 40 and older, the Older Workers Benefit Protection Act, 29 U.S.C. Section 626(f), imposes seven mandatory requirements for an enforceable waiver of ADEA claims: the agreement must (1) be written in language understandable to the average employee, (2) specifically reference rights or claims under the ADEA, (3) not waive claims arising after execution, (4) be supported by consideration in addition to anything the employee is already entitled to receive, (5) advise the employee in writing to consult with an attorney, (6) provide at least 21 days to consider the agreement, and (7) provide a 7-day post-execution revocation period during which the agreement is not effective. Where the waiver is offered in connection with an exit-incentive or other group termination program under Section 626(f)(1)(F)-(H), the consideration period extends to 45 days, and the employer must disclose the "decisional unit" information: the job titles and ages of employees selected and not selected for the program (Estle v. International Business Machines Corp. (N.D.N.Y. 2020); Rusis v. International Business Machines Corp. (S.D.N.Y. 2022); Obergefell v. Firelands Regional Medical Center (N.D. Ohio 2023)).
The Supreme Court held in Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998), that the OWBPA "sets up its own regime for assessing the effect of ADEA waivers, separate and apart from contract law." A waiver that does not strictly comply is invalid, and an employee who signed a defective waiver need not tender back the consideration received before filing suit. Ratification and estoppel theories cannot cure an OWBPA defect (Powers v. Zausmer, P.C. (E.D. Mich. 2025); Soltis v. CVS Pharmacy, Inc., 2025 WL 2101846; Schierholt v. Nationwide Mutual Insurance Co. (S.D. Ohio 2023)). The EEOC's implementing regulations at 29 C.F.R. Part 1625, particularly Section 1625.23, codify the no-tender-back rule. The Sixth Circuit has applied OWBPA's strict requirements consistently, and the Eastern District of Michigan in Vensor v. General Motors, LLC (2023) emphasized that OWBPA "implements Congress' policy via a strict, unqualified statutory structure on waivers." An important practical point: an OWBPA defect invalidates only the ADEA waiver, not the waiver of other claims in the same agreement, which remain enforceable under traditional contract principles (Link v. Board of Education of Kettering City Schools (S.D. Ohio 2023); Geng v. UT Medical Group, Inc. (W.D. Tenn. 2022)). A defective ADEA waiver therefore opens the age-discrimination claim while leaving the rest of the release intact.
In McLaren Macomb, 372 NLRB No. 58 (Feb. 21, 2023), the National Labor Relations Board held that severance agreements containing broad confidentiality and non-disparagement provisions violate Section 8(a)(1) of the NLRA because they have a reasonable tendency to interfere with the prospective exercise of Section 7 rights, including the right of statutory employees to discuss terms and conditions of employment with co-workers, to file unfair labor practice charges with the NLRB, and to cooperate with NLRB investigations. The Board held that the mere act of proffering an unlawfully overbroad agreement violates the Act, even if the agreement is never signed. Following McLaren Macomb, then-General Counsel Jennifer Abruzzo issued Memorandum GC 23-05 (March 22, 2023), interpreting the decision to apply retroactively, to reach severance agreements in non-union workplaces (because NLRA Section 7 protects all statutory employees, not only those represented by unions), and to scrutinize related provisions such as cooperation clauses, no-rehire clauses, and broad releases that interfere with the right to file charges.
The federal landscape has shifted since 2024 but the doctrine has held. On September 19, 2024, the Sixth Circuit enforced the NLRB's order against McLaren Macomb in full in a per curiam decision, but explicitly sidestepped the central holding, writing that "we do not address [the Board's] decision to reverse Baylor and IGT, or whether it correctly interpreted the NLRA in doing so." The court ruled instead on the employer's underlying failure-to-bargain and direct-dealing violations, which independently rendered the severance agreements unlawful. On February 14, 2025, Acting General Counsel William B. Cowen issued Memorandum GC 25-05, rescinding GC 23-05 along with more than 30 other Abruzzo-era memos. GC memos are nonbinding guidance, however, and the rescission did not disturb the underlying Board precedent. The Board itself has since continued to apply McLaren Macomb, including in Prime Communications, LP (declining to overturn the decision) and Valley Radiology, P.A. (March 2026, applying McLaren Macomb to find non-disparagement and confidentiality provisions in a physician's severance unlawful). As of May 2026, McLaren Macomb remains binding Board precedent. The practical implication for severance drafting is unchanged: broad non-disparagement and confidentiality provisions covering non-supervisory employees should be narrowly tailored, with explicit carve-outs preserving the right to file NLRB charges, to discuss wages and working conditions with co-workers, and to cooperate with NLRB investigations.
Severance agreements in Ohio are governed by ordinary contract law: offer, acceptance, consideration, mutual assent, contractual capacity, and legality of object (Uszak v. AT&T Mobility Services LLC, 658 Fed.Appx. 758 (6th Cir. 2016)). Consideration must reflect "a bargained for exchange" and may consist of "either a detriment to the promisee or a benefit to the promisor" (Hank v. Great Lakes Construction Company, 790 Fed.Appx. 690 (6th Cir. 2019)). The additional consideration the OWBPA requires for an ADEA waiver also satisfies Ohio's common-law consideration requirement, since Ohio courts "generally do not inquire into the adequacy of consideration once consideration is found to exist" (Fry v. FCA US LLC, 143 N.E.3d 1108 (Ohio Ct. App. 2017)).
The economic-duress doctrine from Blodgett v. Blodgett, 49 Ohio St.3d 243 (1990), requires proof by clear and convincing evidence of "a wrongful or unlawful act or threat" that "deprived the victim of his unfettered will." The Ohio Supreme Court clarified in Lucarell v. Nationwide Mutual Insurance Co., 152 Ohio St.3d 453 (2018), that the "real and ultimate fact to be determined in every case is whether the party affected really had a choice," and that the duress claim "requires proof of coercion by the other party to the contract." The Sixth Circuit in Hines v. National Entertainment Group, LLC, 140 F.4th 322 (6th Cir. 2025), confirmed that ordinary employment-related pressures, such as the risk of forgoing earnings after having paid fees to work, are "not the kind of serious economic threat contemplated in Blodgett." Critically, threatening to do something the employer is legally entitled to do, including terminating an at-will employee or withholding offered severance, is not a "wrongful or unlawful act" for duress purposes (Hank v. Great Lakes Construction Company; Dacres v. Setjo, L.L.C., 140 N.E.3d 1041 (Ohio Ct. App. 2019)). Duress arguments rarely succeed in the severance context, which is why the OWBPA's consideration and revocation periods are most plaintiffs' best procedural protection.
Unconscionability is an equitable defense requiring both procedural and substantive prongs: procedural unconscionability "concerns the formation of the agreement, and occurs when one party has such superior bargaining power that the other party lacks a meaningful choice"; substantive unconscionability involves "unfair and unreasonable contract terms" (Hamilton v. Fischer Single Family Homes IV, LLC, 743 F.Supp.3d 958 (S.D. Ohio 2024)). Mere disparity in bargaining power between employer and employee, without more, is not enough (Vlad v. DGI Trucking Inc. (N.D. Ohio 2020); Hines v. National Entertainment Group, LLC). On interpretation, Ohio courts apply the parol evidence rule strictly to integrated agreements containing merger clauses (Padula v. Wagner, 37 N.E.3d 799 (Ohio Ct. App. 2015); Alpha Insulation & Waterproofing, Inc. v. Hamilton, 2022-Ohio-1924), and ambiguity is construed against the drafting party under contra proferentem, which generally favors the employee in employer-drafted agreements (Jackson v. General Electric Aviation, 518 F.Supp.3d 1104 (S.D. Ohio 2021)).
Several categories of rights cannot lawfully be waived in a severance agreement no matter how the release is drafted. Federal regulations and statutes guarantee employees the ability to file charges with administrative agencies, communicate with government enforcement bodies about possible violations, and access whistleblower programs. A well-drafted severance agreement preserves these rights explicitly; one that does not is exposed to challenge and, in some cases, regulatory enforcement against the employer.
An employee cannot waive the right to file a charge with the EEOC or to participate in an EEOC investigation. The statutory rule appears in 29 U.S.C. Section 626(f)(4), which provides that "no waiver agreement may affect the Commission's rights and responsibilities to enforce" the ADEA and 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." The EEOC's regulation at 29 C.F.R. Section 1625.22 reinforces this rule and extends it through agency practice to Title VII and the ADA. The Fifth Circuit established the public-policy rule in EEOC v. Cosmair, Inc., 821 F.2d 1085 (5th Cir. 1987), holding that waivers of the right to file an EEOC charge are void as against public policy, while making clear that the employee may still waive monetary recovery from such a charge.
The Sixth Circuit endorsed this distinction in EEOC v. SunDance Rehab. Corp., 466 F.3d 490, 496 (6th Cir. 2006), observing that "courts have observed that an individual may not contract away her right to file a charge with the EEOC, as such contracts are void as against public policy" and that "given the importance of charge-filing to the EEOC's investigatory and enforcement responsibilities, particularly under Title VII and ADA, as well as the rule set out in the Fifth Circuit's Cosmair, it may be that the charge-filing ban in the Separation Agreement at issue here is unenforceable." The EEOC has pursued pattern-or-practice enforcement against severance restrictions that deter charge-filing or cooperation, including EEOC v. CVS Pharmacy, Inc., 70 F.Supp.3d 937 (N.D. Ill. 2014), aff'd, 809 F.3d 335 (7th Cir. 2015), and EEOC v. CollegeAmerica Denver, Inc., 869 F.3d 1171 (10th Cir. 2017). A properly drafted severance agreement preserves the employee's right to file charges with the EEOC, the Ohio Civil Rights Commission, the NLRB, OSHA, the SEC, and any other federal or state agency, while permissibly waiving the right to recover money from a successful charge filed individually (Cotton v. Williamson County Government, 650 F.Supp.3d 609 (M.D. Tenn. 2023)).
SEC Rule 21F-17, 17 C.F.R. Section 240.21F-17(a), prohibits any action that would "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" with respect to such communications. The SEC has actively enforced this rule against employers whose severance and confidentiality agreements failed to preserve the right to report securities violations, including In re KBR, Inc., Exchange Act Release No. 74619 (April 1, 2015), In re BlackRock, Inc., Exchange Act Release No. 79804 (January 17, 2017), and In re HomeStreet, Inc., Exchange Act Release No. 79844 (January 19, 2017), with additional enforcement actions through 2025. The CFTC has a parallel rule at 17 C.F.R. Section 165.19(b) for commodity-market violations, and the IRS whistleblower program at 26 U.S.C. Section 7623(d) contains parallel anti-retaliation protections.
The Sarbanes-Oxley Section 806 anti-retaliation provision at 18 U.S.C. Section 1514A protects employees of publicly traded companies who report securities or shareholder fraud (Digital Realty Trust, Inc. v. Somers, 583 U.S. ___ (2018), holding that SOX requires exhaustion through a complaint to the Secretary of Labor). The Dodd-Frank Section 922 whistleblower provision at 15 U.S.C. Section 78u-6 protects whistleblowers who report directly to the SEC, with the express statement that "nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any whistleblower under any Federal or State law, or under any collective bargaining agreement." A severance agreement that confiscates whistleblower awards or impedes communication with the SEC is exposed both to private rescission and to SEC enforcement. Standard practice is to include an express carve-out preserving the employee's right to communicate with the SEC, CFTC, IRS, NLRB, OSHA, and any other government agency about possible violations of law, to participate in agency investigations, and to receive monetary whistleblower awards.
The Defend Trade Secrets Act whistleblower-immunity provision at 18 U.S.C. Section 1833(b) immunizes individuals from criminal or civil liability for trade-secret disclosures made in confidence to a federal, state, or local government official or to an attorney, or in court filings under seal, for the purpose of reporting or investigating a suspected violation of law. The statute imposes a notice requirement on employers: "an employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information" (18 U.S.C. Section 1833(b)(3)(A)). Failure to provide the notice does not invalidate the agreement, but it forfeits the employer's right to recover punitive damages and attorney's fees in a trade-secret misappropriation action against the employee (Section 1833(b)(3)(C)).
The Speak Out Act, 42 U.S.C. Section 19403, enacted in 2022, provides that "no nondisclosure clause or nondisparagement clause agreed to before the dispute arises shall be judicially enforceable" with respect to sexual assault or sexual harassment disputes where the underlying conduct is alleged to violate federal, tribal, or state law. The statute applies to claims filed on or after December 7, 2022. Combined with the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (9 U.S.C. Section 401 et seq.), which precludes pre-dispute arbitration agreements in sexual harassment cases, these statutes limit the enforceability of broad confidentiality, non-disparagement, and arbitration provisions when the underlying conduct involves sexual harassment or assault. Severance agreements drafted after December 7, 2022 should expressly carve out sexual harassment and sexual assault claims from non-disparagement and confidentiality provisions, and should not attempt to require arbitration of such claims.
Severance is almost always negotiable, but the leverage is not always obvious. The strongest leverage points are:
Severance work is offered on either a flat-fee review (you receive a written analysis and recommended counter, and you handle the negotiation) or a full-engagement contingency or hybrid arrangement (the firm negotiates directly with the employer's counsel). Which makes sense depends on the size of the package, the strength of the underlying claims, and your goals.
It depends on leverage, but realistic improvements typically range from a few weeks of additional pay to a full doubling or tripling of the offered amount when underlying legal claims are strong. Beyond the dollar figure, valuable improvements often include narrowing a non-compete, adding mutual non-disparagement, securing a positive reference, and protecting equity vesting.
Not always, and the deadline is often softer than it appears. ADEA waivers (for employees 40+) require the employer to give you 21 days to consider the agreement, which is statutory. Other deadlines are negotiable. Even when a deadline is firm, requesting a short extension to consult counsel is rarely refused.
You retain the right to file a charge with the EEOC even with a release in place, but you typically cannot recover individual damages from that charge. Some federal claims (Fair Labor Standards Act minimum wage and overtime claims, for example) cannot be waived through a private agreement at all. The carve-outs matter and should be expressly preserved in the agreement.
Almost never. The offer is a starting point, and employers expect responses. The risk of rescission rises if the negotiation is hostile or includes legal threats; the risk falls when the conversation is professional and grounded in specific issues. Working with counsel keeps the tone right.
Discuss your situation with attorney Sean H. Sobel. No obligation, no cost to talk.
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