If you’ve just been let go and your employer offers you a severance package, it’s natural to feel a mix of emotions—shock, confusion, and perhaps a bit of relief. But before you sign anything, take a step back. That severance agreement might be more than just a goodwill gesture—it could be an attempt to limit your legal options, especially if you’ve been wrongfully terminated.
In this post, we’ll explore the intersection between severance agreements and wrongful termination claims, what to look out for before signing, and how to protect your rights.
What Is a Severance Agreement?
A severance agreement is a legal contract between you and your employer, usually offered at the time of termination. It typically includes:
- A lump sum or ongoing payments
- Continued health benefits for a limited time
- A release of legal claims against the employer
- A confidentiality clause
- A non-disparagement or non-compete clause
While not required by law (unless specified in a contract or company policy), many employers offer severance to avoid potential lawsuits or disputes.
Why Would an Employer Offer Severance?
There are several reasons:
- To maintain goodwill or public image
- To secure a release of liability—especially if the termination could be legally challenged
- To prevent you from speaking out about the company or taking legal action
- To create the appearance of fairness, even if the termination was suspect
If you were terminated after reporting discrimination, retaliation, harassment, or another protected activity, the severance agreement may be an effort to avoid a wrongful termination claim.
Severance and Legal Waivers: What Are You Giving Up?
One of the most important things to understand is that most severance agreements include a release of claims. By signing, you’re often agreeing to waive your right to:
- Sue for wrongful termination
- File a discrimination or retaliation complaint
- Pursue any additional compensation through litigation
Once you sign, those legal rights are usually gone for good.
Common Situations Where Caution Is Needed
You should think twice before signing a severance agreement if:
- You recently filed or considered filing a discrimination or harassment complaint
- You reported illegal activity or unsafe conditions (i.e., whistleblower activity)
- You took protected leave (e.g., medical or family leave) and were fired upon return
- You were demoted, disciplined, or treated unfairly before being terminated
- You suspect your firing violated an employment contract or implied promise
In these cases, signing a severance agreement might mean giving up a stronger legal claim that could result in far more compensation.
What to Look For in a Severance Agreement
If you’re presented with a severance agreement, read it carefully. Look out for:
- Waiver of claims: Ensure you understand which rights you’re giving up, and whether the waiver is overly broad.
- Confidentiality and non-disparagement clauses: These may restrict your ability to talk about your experience or even future employment.
- Non-compete or non-solicitation terms: These could limit your job prospects in your industry.
- Timing and deadlines: Employers may pressure you to sign quickly—don’t rush. You have legal rights and time to review.
For employees over 40, federal law (OWBPA) requires the employer to give you at least 21 days to consider the agreement, and 7 days to revoke it after signing.
Should You Sign a Severance Agreement?
The answer depends on your situation. You should ask yourself:
- Am I being fairly compensated for the rights I’m giving up?
- Do I believe I was terminated for an unlawful reason?
- Was I pressured or misled into signing?
- Have I consulted a legal professional?
You don’t have to say no—but you also don’t have to say yes right away. Employers often expect some negotiation, especially from experienced professionals or executives.
How an Attorney Can Help
Before signing anything, consider consulting an employment attorney who can:
- Review the agreement for legal red flags
- Determine whether you have a potential wrongful termination claim
- Help you negotiate better terms
- Ensure that the agreement complies with state and federal law
Even if you ultimately decide to sign, having a lawyer review the agreement can give you peace of mind—and potentially more leverage.
Final Thoughts
Severance agreements are not just about extra money—they’re legal documents with real consequences. If you’ve been terminated under suspicious or unfair circumstances, signing a severance package could close the door on a valid wrongful termination claim.
Don’t let pressure, confusion, or financial stress push you into a quick decision. Take the time to fully understand what you’re agreeing to—and whether it’s truly in your best interest.
If you’ve been offered a severance agreement and suspect your firing was unlawful, contact our office for a thorough review. We’ll help you protect your rights and get what you truly deserve. We recommend wrongful termination lawyers maryland.
