Employment Law · Haute Lawyer Network
What Is a Severance Agreement and Should I Sign It?
Last reviewed: June 2026
A severance agreement is a contract where the employer provides pay and benefits in exchange for the employee releasing all legal claims and complying with other conditions.
Signing permanently waives the right to sue for anything that happened during employment — including discrimination, wrongful termination, wage violations, and harassment.
Typical elements include severance payment, health insurance continuation, a broad release of claims, non-disparagement and confidentiality agreements, and sometimes non-compete or non-solicitation provisions.
Federal law requires employers to give employees at least 21 days to consider a severance agreement releasing age discrimination claims — and 7 days to revoke after signing.
Frequently Asked Questions
Is severance required by law?
No. Federal law does not require employers to pay severance. It is offered voluntarily or pursuant to an employment contract or policy.
Can I negotiate?
Yes — and you should. Employers frequently have room to improve the initial offer, particularly for longer-tenured employees or those with potential legal claims.
What claims am I releasing?
Virtually all claims — discrimination, harassment, retaliation, wage violations, wrongful termination, breach of contract, and any other claim.
Do I have to sign to receive my final paycheck?
No. Final wages for work performed are owed regardless. Conditioning final wages on signing a release is illegal in most states.
What is the OWBPA?
The Older Workers Benefit Protection Act requires specific disclosures and time periods for releases of age discrimination claims under the ADEA.
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