Severance Agreements That Hold Up

Severance is a purchase, not a gift. No federal law requires it — what the employer is buying is a signed release of claims: the employee's agreement not to sue over anything connected to the employment, including discrimination claims under Title VII, the ADA, the Equal Pay Act, and the ADEA. Price it accordingly: a week or two of pay per year of service is a common shape, but the right number is the one that makes signing rational for this employee against the claims they might otherwise bring.

Two structural rules first. If your handbook or offer letters promise severance, it may already be owed — and money already owed cannot buy a release. And the release buys past claims only: rights that arise after the signing date cannot be waived.

A release is enforceable only when supported by consideration beyond what the employee is already entitled to. The final paycheck is not consideration — it's owed. Accrued PTO in a payout state is not consideration — it's owed. COBRA notice is not consideration — it's the law. What counts: severance pay itself, employer-subsidized COBRA premiums, extended vesting, outplacement services, a neutral reference commitment. Whatever you choose, the agreement should recite it plainly, because "knowing and voluntary" is judged on the totality of the circumstances — clear language, real time to decide, and consideration that visibly exceeds existing entitlements.

For any employee aged 40 or over, the Older Workers Benefit Protection Act sets minimum requirements a valid ADEA waiver must meet — the EEOC's guidance lists them explicitly:

Group programs add a disclosure duty: the employer must identify in writing the decisional unit, eligibility factors, time limits, and the job titles and ages of who was selected and who was not. Skipping the disclosure invalidates the ADEA waiver for everyone who signed.

Per the EEOC: no agreement between an employer and an employee can limit the right to testify, assist, or participate in an EEOC investigation, hearing, or proceeding — or to file a charge. A release can waive the right to recover money from such a charge, but not the right to bring it; clauses that try are invalid and unenforceable. The same logic applies to unemployment benefits (eligibility is the state's decision, not a contract term) and to workers' compensation claims in most states. Draft the carve-out into the release rather than hoping nobody notices its absence — a facially overbroad release is Exhibit A in the next lawsuit.