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What is a Severance Agreement?

Severance agreements are contracts made between you and your employer, often as you are being terminated or very close in time to your termination.  Your company usually wants certain key language in your severance agreement.  In almost every circumstance, this will include language prohibiting you from bringing a lawsuit against the company.  Your right to sue is sometimes unfortunately the only leverage you have to keep your employer honest.  The severance agreement will likely also include "restrictive covenants," items that limit your ability to take your customer base with you or limit where you can work in the future.  Before you give up any legal rights and place restrictions on your future, make sure that you understand what it all means.

My Company is Pressuring Me.  Should I Sign the Agreement, then Consider my Options?


“A waiver in a severance agreement generally is valid when an employee knowingly and voluntarily consents to the waiver.”

Many laws are written to give the employee a lot of protection – this one is not.  You may feel like your company has a gun to your head, but you will normally only be able to show that you did not voluntarily sign your name under extreme circumstances, such as literally having a gun held to your head.  If you are unsure about your severance agreement and have an extremely limited time to respond, tell your employer (preferably in writing and verbally) that you want to discuss the matter with an attorney and contact us immediately.

How Do I Know What I’m Giving Up?

Severance agreements are required to have almost uniform language in each restrictive covenant, and if that language is not present, the term may not be enforceable.  For example, look for language in the agreement talking about the Age Discrimination in Employment Act, Title VII of the Civil Rights Act, or the Americans with Disabilities Act.  This language is likely limiting or stopping you altogether from recovering any damages even if you later win a claim against your employer for discrimination, harassment, retaliation, or wrongful termination.

What Can I Get for my Signature?

The law gives a lot of latitude to both parties when agreeing on the terms of a severance agreement, but there are certain items, such as your pension or earned leave, that cannot normally be included.  If the agreement gives you something you would not have otherwise been entitled to, however, it will be considered a valid agreement, even if you didn’t want what your company gave you.

How do I Get my Company to Offer More?

Like any negotiation, you need leverage.  If you think your employer may have terminated you due to discriminationretaliation, or because you are a whistleblower, then you may have substantial leverage.

Should I Sign my Severance Agreement?

The Kirby G. Smith Law Firm has considerable experience negotiating severance agreements for employees ranging from administrative assistants to owners.  We are aware of the “going rates” for severance agreements and can judge the strength of your company’s offer to you compared to any leverage you may have.  Contact us today for an evaluation and document review so we may review your severance agreement and advise you of what to do next.


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