Severance Agreement Checklist

Under OWBPA, workers 40+ must receive 21 days for individual layoffs or 45 days for group layoffs. Some states like Illinois extend this to all workers. If your deadline is shorter, the release may be voidable.

OWBPA requires a 7-day revocation period for workers 40+. If this is missing, the age discrimination waiver may be unenforceable.

For workers 40+, the agreement MUST specifically mention ADEA by name, advise you in writing to consult an attorney, and for group layoffs, disclose the job titles and ages of everyone selected and retained. If ANY of these are missing, the age discrimination waiver may be invalid — significant leverage.

Federal WARN requires 60 days. NY requires 90. CA and IL apply at 75 employees instead of federal 100. If your employer violated WARN, you may be owed additional back pay — do not waive this claim cheaply.

Non-competes are void in CA and WA. Restricted in IL, MA, and NY. Enforceable in TX, FL, and PA. If you're in a ban state, don't trade severance for removing it — it's already unenforceable.

Non-solicitation clauses remain enforceable in most states even where non-competes are banned. Review what contacts and activities are restricted.

Federal law and many state laws (including WA's Silenced No More Act) protect your right to report illegal conduct regardless of NDAs. Overly broad NDAs may be partially unenforceable.

Most severance agreements include a broad release of all claims. Understand what you're giving up — including potential discrimination, wage, WARN Act, and benefits claims. The more valuable claims you have, the more the release is worth.

You cannot waive workers' compensation rights, unemployment benefits, or the right to file an EEOC charge. If the agreement tries to waive these, flag it.

Lump sum is generally preferable — it's harder to claw back, may be better for unemployment timing, and gives you immediate access. Installment plans can be stopped if you're accused of breaching the agreement.

Several states require vacation payout at termination as earned wages. Check your state. If it's mandatory, this should be in addition to — not part of — your severance package.

If you worked toward an annual bonus or earned commissions, confirm these are included or explicitly addressed. Don't let them disappear into the severance number.

Understand what happens to unvested equity. Can you negotiate accelerated vesting? What's the exercise window for options? The standard 90-day exercise window is almost always negotiable — extending it can be worth more than the cash severance itself.

The default 90-day post-termination exercise window for stock options is a starting point, not a fixed rule. Negotiate for 6-12 months, especially if options are deep in-the-money. This costs the company nothing but can be worth tens of thousands to you.

Over half of severance packages include outplacement services. If yours doesn't, ask for it — it costs the company very little and can significantly help your job search. Typical value: $2,000-$10,000.

COBRA can be extremely expensive ($600-2,000+/month). Negotiate for employer-paid continuation for 3-12 months — this is often easier for employers to provide than cash.

Get the reference language in writing. A specific commitment to a positive reference or at minimum a neutral "dates of employment and title" policy protects your job search.

If you're agreeing not to disparage the company, make sure it's mutual. One-sided non-disparagement only benefits the employer.

If the employer wants you available for questions, transition, or legal matters after departure, this should be compensated at your normal rate — not included as free labor.

Severance is generally taxed as ordinary income. In states with no income tax (FL, TX, WA), you keep more. Consider the timing of payment relative to the tax year.

Rules vary by state. Some states (like PA) don't reduce benefits unless severance exceeds a threshold. Others (like FL) delay benefits during the severance period.