Severance Agreement Rights: What You Can Sign Away

A severance agreement usually trades payment for a release of claims, and federal age-discrimination rules limit what that release can do.

If your departure involves broader workplace issues, explore our guides to wrongful termination and unpaid wages.

What a Severance Agreement Lets You Sign Away and What It Cannot

A severance agreement usually trades a payment or benefits for a release of claims you could bring against your employer, but the law limits what the release can do. Courts generally look at whether the employee gave up the claims knowingly and voluntarily. If you are 40 or older, a release of age claims must also meet separate federal requirements, including time to consider it and a revocation period (see the section below).

Federal age discrimination rules treat claims that already exist differently from claims that arise later. Under federal age discrimination rules in 29 CFR 1625.22(c)(2), a waiver of rights or claims that arise after the date the agreement is signed is prohibited. The law permits an agreement to govern scheduled future actions, such as an employee agreeing to retire on a set calendar date. That rule is part of the federal age-discrimination waiver regulation; ask an employment attorney how a release of other kinds of claims is treated.

Under the same regulation (29 CFR 1625.22(i)(1)), no waiver may be used to justify interfering with an employee's protected right to file a charge with the Equal Employment Opportunity Commission (EEOC). The same rule protects your right to participate in an agency investigation or official proceeding conducted by the EEOC. A signed release may still bar you from collecting individual financial relief from a subsequent charge, depending entirely on the written language of your agreement.

Employees weighing claims of illegal treatment can learn more through our guides covering workplace discrimination and unlawful employer retaliation.

Whether Your Employer Owes Severance

Private employers have no universal obligation under federal statute to provide separation pay to departing personnel. Whether an employer must provide severance depends on whether an independent contractual or legal duty exists.

Severance obligations are typically created through private employment contracts, written company policies, established benefit plans, or collective bargaining agreements. In other instances, severance pay is created entirely through an individualized separation agreement negotiated at the time of departure. Some states and some mass-layoff rules add severance requirements. Because these rules vary by state, confirm what applies to you with an employment attorney. Employees should read their individual employment contracts, employee handbooks, and written company plan documents to determine what rules govern their workplace.

Final-pay timing is a separate question; see our guide to final paycheck laws.

Extra Protections If You Are 40 or Older

Federal law provides mandatory safeguards for workers aged 40 or older who are asked to release statutory age discrimination claims. Under the Age Discrimination in Employment Act (ADEA) as amended by the Older Workers Benefit Protection Act (OWBPA), waivers must satisfy specific statutory standards to be legally enforceable. The federal requirements governing these releases are codified in 29 U.S.C. 626(f) and regulatory provisions within 29 CFR 1625.22.

The agreement must be written in plain language calculated to be understood by the individual. Under 29 CFR 1625.22(b), the language must be geared to the employee's level of understanding. The contract must specifically refer to the Age Discrimination in Employment Act (ADEA) by name. The employee must receive legal consideration in addition to anything of value that they already have a right to receive. The employer must also advise the individual in writing to consult an attorney before signing the document.

Federal regulation sets minimum timelines for evaluating and revoking an agreement that contains an age waiver. Under 29 CFR 1625.22(e)(1), the individual must receive at least 21 days to consider the agreement. If the waiver is requested in connection with an exit incentive or other termination program offered to a group or class of employees, that review period extends to at least 45 days. The consideration timeline runs from the date of the employer's final offer. A material modification to that final offer restarts the statutory clock, while a non-material change does not restart the period unless both parties agree otherwise. An individual retains the legal right to sign before the consideration window expires, provided the decision is knowing, voluntary, and not improperly induced by the employer.

Following execution, the worker has a mandatory revocation window. Under 29 CFR 1625.22(e)(2), the agreement must allow the employee at least seven days after signing to revoke the contract. The severance agreement does not become effective or legally enforceable until that seven-day revocation window has fully passed. The parties cannot shorten this seven-day period.

For more on age-based protections, see the EEOC page on age discrimination.

Terms to Read Closely in a Proposed Package

A severance agreement can include terms that restrict what you do after employment ends. These practical checks help you spot restrictive terms; they are not legal rules.

Read the exact list of released claims line by line. Check whether the agreement contains restrictive post-employment covenants such as non-compete clauses, non-disparagement covenants, or broad confidentiality rules.

Review whether the draft includes arbitration or class-action waiver language. Examine whether the agreement addresses benefits continuation, including access to health insurance coverage or the provision of a neutral employment reference for future job searches. Check the payment schedule along with any conditions on payment. Finally, identify any clauses mandating the return of company property, and inspect any statements addressing your eligibility to collect unemployment compensation benefits. An employment attorney can explain what any of these clauses mean in your agreement.

If your workplace dispute involved sustained harassment, compare the draft release against our guide on hostile work environment laws.

Deadlines That Keep Running Regardless of Severance

Signing a severance agreement does not on its own extend the EEOC filing deadlines. Federal law gives employees a limited window to assert statutory discrimination claims before regulatory agencies.

Under federal guidelines established by the EEOC charge filing deadlines, the standard time limit to file a formal administrative charge is 180 calendar days from the date of the unlawful discrimination. That filing window extends to 300 calendar days when a state or local enforcement agency enforces a statute prohibiting discrimination on the same legal basis. Federal employees face a much shorter timetable: they generally must contact an agency Equal Employment Opportunity (EEO) counselor within 45 calendar days of the discriminatory act.

Charge-filing deadlines are strict and run from specific dates. If you are uncertain about the exact date of an unlawful employment practice, treat the earliest possible date as your operative deadline. To understand the administrative process, review our guide to filing an EEOC complaint or read the primary filing instructions on the EEOC filing a charge portal.

Negotiating the Offer and Separation Terms

Employees retain the practical ability to propose modified terms. Keep a written record of every communication with the employer.

The following practical negotiating steps help you structure your requests clearly; they do not represent formal legal requirements:

• Ask for the initial offer and the complete draft agreement in writing before discussing specific provisions.
• Request additional time to review the document in writing, establishing a clear written record of your timeline.
• Ask whether the employer will consider modifying the payout amount, extending health benefits continuation, or adjusting the scope of restrictive covenants.
• Ask whether the employer will agree to a neutral reference.
• Retain organized physical or digital copies of every version of the draft agreement and all related correspondence.
• Refrain from signing the agreement until all revised terms appear in a final written document.

Whether an employer agrees to any requested modifications remains entirely up to the employer. For a different workplace agreement, see our guide to the last chance agreement.

When to Bring in a Lawyer

Based on the text of 29 U.S.C. 626(f) and 29 CFR 1625.22, the practical order is: read the release, check whether the age-40 requirements apply to you, and have a licensed employment attorney review it before signing if the offer matters. Because severance agreement rules differ by state, employer, and the facts of each case, you should consult a licensed attorney.

These statutory review protections apply specifically to workers aged 40 and older facing age discrimination waivers under federal law. If you are under 40 years of age, the statutory 21-day review period and seven-day revocation window under the Older Workers Benefit Protection Act do not apply to your agreement. If you already have a pending charge or lawsuit, have an attorney read the release before you sign. A licensed employment lawyer in your jurisdiction can examine the exact terms of your proposed separation agreement, verify applicable statutory deadlines, and explain your options for moving forward.

Frequently Asked Questions

Is my employer required to give me severance?

No federal law requires a private employer to pay severance on termination in general. Severance obligations are usually created by an employment contract, a written company policy or plan, a collective bargaining agreement, or an agreement negotiated at separation. Some state laws and mass-layoff statutes add independent requirements.

Can I still file an EEOC charge after signing a severance agreement?

Generally yes. Under the federal age-discrimination waiver regulation, no waiver may be used to justify interfering with an employee's protected right to file a charge with the EEOC or participate in an agency investigation. A signed release may still bar you from collecting individual financial relief, depending on the language of the contract.

How long do I have to decide whether to sign?

Under federal age discrimination rules, workers aged 40 or older must receive at least 21 days to consider an individual severance offer, or at least 45 days if the offer is part of a group termination program. The agreement must also provide at least seven days after signing to revoke the contract. These timing rules apply to releases of age claims by workers 40 or older; if you are under 40, ask the employer in writing for more time.

Can I negotiate a severance package?

Yes, you can ask the employer to change the terms, such as increasing the payment amount, extending benefits continuation, or narrowing restrictive covenants. An employer is not legally required to agree to proposed changes. All negotiated modifications should be documented in writing before signing.

Does a severance agreement waive claims for things that happen after I sign?

For age claims, no. Under the federal age-discrimination waiver rules, a waiver of rights or claims that arise after the date the agreement is signed is prohibited. Agreements to perform future employment actions, such as retiring on a set date, are not barred by that rule. Ask an employment attorney how a release of other kinds of claims is treated.