Three Things to Know Before Signing A Severance Agreement

(Last Updated On: May 12, 2021)

This is it. With very few exceptions, once the agreement is in effect, you cannot go after your employer for anything, ever again. So, if you are owed bonuses, commissions, wages, think your termination results from your request for FMLA leave, or discrimination, you have given up your right to sue, threaten to sue or demand anything else from your employer. You are signing away your right to get anything beyond what the agreement calls for, so make sure you have considered what might be owed to you and whether the terms of the agreement make it worth it to you.

2. Read and Understand the Terms. Most people flip to the section that says how much money they will get if they sign the agreement, then sign on the dotted line. Most agreements have a lot more terms, and when the employer is drafting the agreement it should be obvious that they are going to be skewed to the employer’s benefit. Consider some of these questions that regularly come up: are you allowed to file for unemployment assistance? Are you bound by a non-compete clause? Will the employer give you a positive reference? Only a thorough read of the terms will answer these questions. Your legal rights depend on it.

3. You Might Be Able to Get a Better Deal. Depending on your individual situation, and the facts surrounding the termination of your employment, you may be able to get a better deal than what is on the table. When most employees don’t even bother to read the whole document, it is easy for an employer to litter the severance agreement with unfavorable terms to the former employee. If you involve a lawyer before signing the document (or within seven days of doing so if you are over 40 years old), your lawyer may be able to negotiate better terms—including a larger payout.