Should I Sign a Severance Agreement?

Severance Agreement Decision Checker

Enter what you know about your offer. You'll get a clear read — do not rush, review carefully, or likely standard — plus red flags, missing items, and a downloadable checklist.

What a severance agreement actually means

A severance agreement is a legal contract. In it, your employer offers money (and sometimes benefits) in exchange for something specific: your promise not to sue them, usually plus other commitments like confidentiality or a non-compete. It is not a gift and it is not automatic — it's a negotiation with a document at the end.

The single most important thing to understand: you are not required to sign, and you almost never have to sign immediately. The offer is a starting point. Reading it carefully — or having it reviewed — is normal, expected, and often financially worthwhile.

What you give up when you sign

The core trade is the release of claims. By signing, you typically agree not to bring legal claims connected to your employment or termination — discrimination, wrongful termination, unpaid wages, and similar. Depending on the agreement, you may also give up:

• The ability to compete or work for certain employers (non-compete)
• The freedom to recruit former colleagues or contact clients (non-solicit)
• The right to speak negatively about the employer (non-disparagement)
• The ability to discuss the terms publicly (confidentiality)

Some rights generally cannotbe waived — for example, filing a charge with the EEOC or collecting unemployment you're entitled to. If an agreement claims to take those away, that's a reason to slow down and ask questions.

Common severance agreement clauses

Red flags before signing

What to negotiate before signing

You don't have to accept the first offer. Pick one or two high-value asks rather than a long list. The most common — and most winnable — requests:

Ready to ask? Our severance negotiation guide has copy-paste email templates and a strategy builder.

Special rules if you're 40 or older

How severance affects unemployment

Severance does not automatically disqualify you from unemployment, but the rules vary by state and details matter. Whether severance is paid as a lump sum or salary continuation can change when — or whether — benefits are reduced. How your employer codes the separation (layoff vs. resignation vs. mutual) matters a lot, too.

Don't assume you're blocked. Check with your state agency as early as it allows, and estimate your possible benefit with the Unemployment Benefits Estimator.

COBRA, PTO, bonus, and equity questions

The cash number gets the attention, but the surrounding items can be worth thousands:

• Health insurance / COBRA

  When does coverage end? Will the employer subsidize COBRA, and for how long? Compare against a Marketplace plan before you decide.

• Unused PTO

  In many states earned PTO is owed regardless of the agreement — confirm it's paid out.

• Bonus & commission

  Earned but unpaid bonus or commission may be owed. Ask whether it's included or forfeited.

• Equity / RSUs / options

  Check vesting dates and any post-termination exercise window — this is easy to lose by default.

When to ask an employment attorney

A one-time attorney review is often worth it when the agreement includes a broad release, a non-compete, an age-claim waiver (40+), equity, or a large dollar amount — or if you suspect the termination itself was unlawful. Many employment attorneys offer flat-fee reviews. The cost is usually small relative to what a stronger package or a corrected clause can be worth.

What to do if your deadline is short

1. 1Ask — in writing — for more time to review. This is normal and rarely refused outright.
2. 2If you're 40+, point out the OWBPA's 21/45-day consideration periods.
3. 3Prioritize reading the release of claims and any restrictive clauses first.
4. 4Use the checker above to flag the highest-risk items fast.
5. 5If it's high-stakes and time is tight, book a same-week flat-fee attorney review.

Severance agreement checklist

Tick each item as you confirm it. Your progress saves in this browser, so you can come back to it — and the decision-readiness meter tells you when you've covered the essentials.

Frequently asked questions