What it is
A severance clause spells out what you receive if your employment ends: pay (often weeks per year of service), benefits continuation, and what you must give up in return — usually a release of legal claims and sometimes new restrictive covenants.
Why it matters
The 'release' inside a severance agreement can waive discrimination, harassment, and wage claims worth far more than the severance itself. Federal law (OWBPA) requires 21–45 days to consider releases of age claims and 7 days to revoke.
Sample clause language
"In exchange for severance, Employee fully releases Company from any and all claims, known or unknown, and agrees to a 12-month non-compete and non-disparagement obligation."
What it really means: Watch for new restrictive covenants slipped into the severance — non-competes, non-solicits, or non-disparagement you never agreed to before. Negotiate them out, or get more money.
Red flags
- Less than 1–2 weeks per year of service
- Adds new non-compete or non-solicit
- Broad non-disparagement clause
- No 21-day consideration period for age releases
- Forfeits earned bonuses or unvested equity
Fair / acceptable
- 2+ weeks pay per year of service
- Continued health benefits (COBRA reimbursement)
- Mutual non-disparagement
- Carve-out for whistleblower claims
- Earned bonus and accrued PTO paid
How to negotiate
- Negotiate severance UP — first offer is rarely the last
- Strike new restrictive covenants
- Demand mutual non-disparagement
- Get earned bonus and PTO paid separately
Frequently asked questions
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Not legal advice. For informational purposes only.