Five things to check before you sign a severance agreement
Being handed a severance agreement on your last day is disorienting. There is usually a deadline, a lot of dense language and a number that may or may not be fair. Here is what we look at first when a client brings one in.
1. How long you have to decide
If you are 40 or older, federal law (the Older Workers Benefit Protection Act) gives you at least 21 days to consider the agreement, or 45 days if you were let go as part of a group layoff, and seven days to change your mind after you sign. If you are under 40 there is no legal minimum, but asking for a week to have a lawyer look at it is normal and rarely refused.
2. What you are giving up
Almost every severance agreement includes a release: you agree not to sue the company for anything that happened before you signed. That release is what the company is paying for. If you think you were let go because of your age, a disability, a complaint you made or a medical leave you took, those claims may be worth more than the severance on the table, and you should talk to a lawyer before signing them away.
Some things cannot be released, such as your right to file a charge with the EEOC, to collect unemployment, or to claim vested retirement benefits. A good agreement says so.
3. Non-disparagement and confidentiality
Read these carefully. Are they mutual, or only binding on you? Do they stop you from talking about the terms of the agreement, or about your time at the company at all? Since the federal Speak Out Act took effect in 2022, a clause signed before a dispute arises cannot be used to silence claims of sexual harassment or assault.
4. Restrictive covenants that come along for the ride
Severance agreements often restate, or quietly extend, a non-compete or non-solicitation clause. If yours does, it is worth understanding before you start looking for your next job. Our non-compete article explains how Ohio courts treat them.
5. Whether the number can move
It often can. Employers set aside room to negotiate more often than people expect, especially when the employee has a plausible legal claim, long tenure, or is giving up something valuable like a commission that was nearly earned. Beyond more money, it is often possible to negotiate continued health coverage through COBRA paid by the employer, a neutral reference, accelerated vesting, or a later end date that carries you past a bonus date.
Getting help
We review severance agreements for a flat fee and, if it makes sense, negotiate with your former employer on your behalf. You can read more about how that works on our severance negotiation page, or simply contact us with your agreement and the deadline.
This article is general information about Ohio law as of the date above. It is not legal advice for your situation. If you have a specific question, talk to us.