Being laid off is stressful enough. Being handed a severance agreement on top of it can make the situation even more overwhelming.
Many workers feel pressure to sign quickly, especially if they are worried about money, health insurance, or finding their next job. But a severance agreement is not just a payment. It is a legal contract. In most cases, your employer is offering you money or benefits in exchange for giving up rights.
That means you should understand what you are signing before you agree to it.
Are Massachusetts workers entitled to severance?
Usually, no.
A common misconception is that employees are automatically entitled to severance when they are laid off or terminated. In Massachusetts, that is generally not true. Unless you have an employment contract, severance plan, union agreement, company policy, or other enforceable promise that says otherwise, your employer usually does not have to offer severance.
But that does not mean your employer can withhold everything.
Massachusetts law does require employers to pay certain amounts that are already owed. If you are discharged, you must generally be paid your earned wages on the day of termination. Earned, unused vacation time is also treated as wages in Massachusetts. Those amounts are different from severance. They are not extra benefits your employer can make conditional on signing a release.
Severance is typically something additional.
What is a severance agreement?
A severance agreement is a contract between an employer and a departing employee.
Usually, the employer offers something of value, such as money, health insurance assistance, or other benefits. In exchange, the employee usually agrees to release legal claims against the employer and accept certain post-employment obligations.
That release of claims is the heart of most severance agreements.
By signing, you may be giving up the right to sue your employer for claims related to your employment or termination, including claims for discrimination, harassment, retaliation, wrongful termination, wage issues, leave violations, and other workplace-related concerns.
That does not mean every severance agreement is bad. In many cases, signing makes sense. But workers should understand what they are trading away before they decide whether the offer is fair.
Do you have to sign right away?
No.
Employers sometimes present severance agreements with short deadlines or make employees feel like they must sign immediately. In most situations, you should not sign on the spot.
If you are 40 or older and your employer is asking you to release age discrimination claims, federal law provides specific protections. Depending on the circumstances, you may be entitled to at least 21 days to review the agreement, or 45 days if the severance offer is part of a group layoff. You may also have 7 days after signing to revoke your acceptance.
Even if you are under 40, you are still allowed to take time to review the agreement, ask questions, and seek legal advice. A severance agreement can affect your finances, your legal rights, your insurance coverage, and your next job search. It is worth slowing down.
Is severance negotiable?
Often, yes.
Not every severance offer can be dramatically improved. In a large reduction in force, an employer may use a standard formula and have limited flexibility on the cash amount. But that does not mean there is nothing to discuss.
Severance negotiations are not only about asking for more weeks of pay. Other terms may be just as important, and sometimes more valuable.
Potentially negotiable items may include:
- The amount of severance pay. The cash number may be negotiable, especially if the termination is individual, the employee has strong leverage, or there are potential legal claims.
- Health insurance. Employees may be able to negotiate employer-paid COBRA or a health insurance stipend for a period of time.
- Payment timing. A lump sum versus salary continuation can affect cash flow and, in some situations, unemployment questions.
- Bonuses, commissions, and incentives. If you earned compensation before termination, make sure the agreement does not waive money you are already owed.
- Equity and stock options. Employees with RSUs, stock options, or other equity should review vesting dates, exercise windows, and forfeiture language carefully.
- References and job title. A neutral reference, confirmation of dates of employment, or agreed-upon separation language can matter in a job search.
- Non-disparagement. If the company wants you to agree not to say anything negative, you may want the obligation to be mutual.
- Confidentiality. Confidentiality provisions should be reviewed carefully so you understand what you can and cannot say.
- Noncompete or non-solicitation terms. A severance agreement may include new restrictions or reaffirm old ones. Do not assume they are harmless.
- Unemployment language. You should understand whether the agreement affects your ability to apply for unemployment benefits.
- Outplacement services. Resume help, career coaching, or job placement support can be valuable, especially during a difficult job market.
The goal is not always to “fight” for the sake of fighting. The goal is to understand whether the offer fairly accounts for what the employer is asking you to give up.
Where does leverage come from?
The strongest severance negotiations usually start with leverage.
Leverage can come from many places, including:
- Evidence of discrimination, harassment, or retaliation
- A recent protected complaint or request for accommodation
- Medical leave, pregnancy, disability, or family leave issues
- Unpaid wages, commissions, bonuses, or accrued vacation
- A termination that does not match your performance history
- A “for cause” explanation that does not line up with the facts
- A group layoff where WARN or other notice requirements may apply
- Inconsistent treatment compared to similarly situated employees
- Contractual rights, equity rights, or severance plan language
Sometimes leverage is legal. Sometimes it is practical. An employer may want a smooth transition, a clean release, confidentiality, cooperation, or certainty that the employee will not bring claims later.
That release has value. The question is how much.
Common mistakes workers make with severance agreements
When someone has just lost a job, it is easy to focus only on the severance amount. But the details matter.
Common mistakes include:
- Signing too quickly
- Assuming the agreement is “standard” and therefore harmless
- Focusing only on the cash payment
- Ignoring restrictive covenants
- Overlooking unpaid wages, commissions, bonuses, or vacation time
- Failing to understand what claims are being released
- Agreeing to one-sided non-disparagement language
- Missing deadlines under the agreement
- Waiting until the last day to ask an attorney for help
- Taking or forwarding confidential company documents in an effort to preserve evidence
That last point is important. Workers should preserve lawful personal records, such as offer letters, compensation plans, performance reviews, and separation documents. But they should be careful not to take trade secrets, confidential business information, client records, or documents they are not authorized to keep.
What should you do before signing?
If you receive a severance agreement, consider taking these steps before you sign:
- Calendar the deadline.
- Read the entire agreement, not just the payment section.
- Identify what money is severance and what money you are already owed.
- Review any noncompete, non-solicitation, confidentiality, or non-disparagement language.
- Check whether health insurance, bonus, commission, equity, and retirement issues are addressed.
- Write down any concerns about the termination, including discrimination, retaliation, leave, wage, or notice issues.
- Ask for more time if you need it.
- Speak with an employment attorney before signing, especially if something feels wrong.
A severance agreement can close the door on important legal rights. It is much easier to negotiate before you sign than after.
The bottom line
Severance can provide important financial support during a job transition. But it is not free money. In most cases, your employer is buying peace, certainty, and a release of claims.
Massachusetts workers should not assume the first offer is the only offer, and they should not assume “standard” means fair. The right approach depends on the facts: what happened, what you are owed, what claims you may have, what restrictions the employer wants, and what you need to move forward.
If you have been offered a severance agreement, are facing a layoff, or are unsure whether signing is in your best interest, it is worth speaking with an experienced Massachusetts employment law attorney before you make a final decision. Contact Rodman Employment Law to discuss your situation.
