Severance Negotiations
Severance Agreements and Negotiations
Careful analysis, clear advice, and strategic negotiation when needed
Severance agreements often arrive during stressful moments in an employee's career. They may come with deadlines, financial pressure, or uncertainty about what the terms mean. A severance package can offer value, but it can also require you to waive significant rights. Before signing, it is important to understand the agreement fully and determine whether the terms should be improved.
As a solo practitioner, I review every severance agreement personally. My approach is direct: I explain each provision in plain language, evaluate whether the compensation is appropriate, and advise you on whether negotiation is advisable. When negotiation is necessary, I communicate firmly and professionally to help secure a more favorable outcome.
Understanding the Structure of a Severance Agreement
A severance agreement generally offers compensation or benefits in exchange for a release of claims. Releases are often broad, covering a wide range of potential legal rights. These agreements may also include confidentiality, non-disparagement, cooperation clauses, and other provisions that affect your future decisions.
My review focuses on what each clause means in practical terms, whether the language is typical or unusually restrictive, and whether the proposed compensation adequately reflects your circumstances and potential claims.
Key Considerations in Evaluating a Severance Package
While every agreement is different, most require careful attention to several core issues:
- Scope of the release. Some releases are drafted more broadly than necessary or attempt to cover claims that cannot legally be waived.
- Amount and structure of compensation. Severance should be evaluated in context: your tenure, the circumstances of separation, and whether you may have legal claims that would justify negotiating a higher amount.
- Confidentiality and non-disparagement provisions. These clauses affect what you may say about your employment going forward and often deserve close scrutiny.
- Repayment or clawback provisions. Some agreements require repayment under certain circumstances, which can be overlooked without a detailed review.
Each of these components influences whether the agreement should be accepted as-is or negotiated.
How Restrictive Covenants Fit Into Severance Agreements
Many severance agreements incorporate or reaffirm existing restrictive covenants, such as non-compete or non-solicitation clauses. Others introduce new restrictions as a condition of receiving severance. I review these provisions, explain how they operate, and clarify what obligations they create.
A deeper analysis of enforceability under New York law appears on the dedicated page addressing Noncompete and Restrictive Covenant Issues, where we look at these restrictions more broadly and outside the severance context.
The OWBPA: Consideration and Revocation Periods for Employees Over Forty
If you are over forty and being asked to release age discrimination claims under the Age Discrimination in Employment Act, the severance agreement is also governed by the Older Workers Benefit Protection Act, commonly known as the OWBPA. For an individual departure, the OWBPA generally requires that you be given twenty one days to consider the agreement before signing, along with a separate seven day period after signing during which you may revoke your decision. The release is not enforceable against age claims until that revocation period has passed.
For group terminations, such as a layoff or reduction in force affecting more than one employee, the OWBPA imposes stricter requirements. You must be given forty five days to consider the agreement, and the employer must disclose the job titles and ages of everyone in the decisional unit, meaning everyone who was considered for the layoff, along with who was and was not selected. Missing or incomplete disclosures can affect whether a release of age claims is enforceable at all.
How the WARN Act Can Affect Severance
The federal Worker Adjustment and Retraining Notification Act, along with New York's own WARN Act, requires certain employers to give advance written notice before a plant closing or mass layoff. The New York statute applies more broadly than the federal version, reaching smaller employers and lower headcount thresholds.
When an employer fails to give the required notice, affected employees may have an independent claim for back pay and benefits covering the notice period. If your termination was part of a larger layoff and no advance notice was given, that potential WARN claim is often a meaningful part of the leverage available in negotiating your severance, separate from any discrimination or retaliation claims that may also exist.
How I Approach Severance Negotiations
If negotiation is appropriate, I pursue it thoughtfully and with a clear strategy. Employers often expect some level of negotiation, and a well-reasoned request supported by facts and law can lead to improved terms. In many cases, adjustments can be made to compensation, release language, confidentiality provisions, or other terms that affect your future.
Leverage in a severance negotiation typically comes from specific, identifiable facts: a termination that followed closely after a complaint about discrimination, harassment, unpaid wages, or a request for medical leave, inconsistent or shifting explanations for the decision, treatment that differed from similarly situated coworkers, or a WARN Act notice failure. Tenure and the employer's own interest in a clean, release backed departure also matter. There is no legal requirement that severance follow any particular formula unless one already exists in a written policy, plan, or employment contract, though many employers informally base an initial offer on a set number of weeks or months of pay per year of service. Understanding which of these factors apply to your situation is often what separates an initial offer from a materially improved one.
Because I limit my caseload, clients receive close, individualized attention rather than formulaic comments or rushed reviews.
Severance Agreement Frequently Asked Questions
Do I need a lawyer to review a severance agreement?
You are not required to have a lawyer, but severance agreements often contain broad releases, confidentiality clauses, non-disparagement terms, and restrictive covenants that can affect your future rights. A legal review ensures you understand the implications and whether the offer is fair based on your circumstances.
Is the amount of severance negotiable?
In many cases, yes. Employers frequently expect some negotiation, especially if you may have potential legal claims, long tenure, or circumstances suggesting the separation was handled improperly. Negotiation can also focus on non-monetary terms such as release language, confidentiality, or restrictive covenants.
Will signing a severance agreement prevent me from bringing legal claims?
Generally, yes. Most severance agreements require a broad release of claims, including claims you may not realize you have. Some claims cannot legally be waived, but many can. It is important to understand what rights you are giving up before signing.
What if the agreement includes a non-compete or other restrictive covenant?
Many severance agreements reaffirm existing restrictions or introduce new ones. These clauses can affect your ability to work for competitors or solicit clients. Some restrictions may be enforceable and others may not, depending on New York law and the specific language used.
Does my employer have to give me time to consider the agreement?
Yes, in certain situations. Employees over forty who are asked to waive age-discrimination claims must be given specific consideration periods under federal law. Even outside that context, employers typically provide deadlines that can often be extended. You should not feel pressured to sign without adequate time to review the agreement.
What if I already signed the agreement, can it be undone?
It depends. Some agreements include revocation periods, and others can potentially be challenged if obtained through fraud, coercion, or unlawful terms. Once a valid agreement becomes effective, however, it may be difficult to unwind.
What happens if I refuse to sign the severance agreement?
Severance is usually optional for employers, meaning you typically receive payments or benefits only if you agree to the terms. Refusing to sign may mean forfeiting the package, but it preserves your right to pursue legal claims. Understanding the value of those claims can help guide the decision.