What legal claims are you giving up when you sign a severance agreement?
Often, more than employees realize. A severance agreement commonly includes a broad release covering existing employment-related claims through the signing date. That may include discrimination, retaliation, harassment, FMLA, disability accommodation, wage, commission, contract, whistleblower, and wrongful-termination claims.
The release should be evaluated against what actually happened before termination. A severance payment that looks generous in isolation may be modest if the employee is releasing a substantial legal claim.
Some rights are subject to special waiver rules, and some rights cannot be waived in the same way. Employees age 40 or older receive special federal protections when waiving age-discrimination claims.
Jurisdiction note: This article provides general information for New Jersey and Pennsylvania employees. Severance releases are contracts, and enforceability can depend on federal law, NJLAD, PHRA, wage law, whistleblower statutes, the employee’s age, the agreement language, and whether the employee received additional consideration.
Before signing a release, identify four things
- What claims exist today?
- Exactly which parties and laws are released?
- What money or benefits are you receiving solely for the release?
- Which rights remain after signing?
A severance payment is often consideration for a release
Employees are sometimes already entitled to final wages, earned commissions, PTO under policy, expense reimbursement, or statutory WARN severance. Those amounts should not automatically be treated as the “extra” consideration supporting a broad release.
Ask the agreement to identify what the employer already owes and what additional value is being offered in exchange for the release.
Discrimination and harassment claims
General releases commonly cover claims under Title VII, the ADA, the ADEA, NJLAD, PHRA, Philadelphia law, and other anti-discrimination statutes.
Before releasing those claims, consider whether the separation followed:
- Protected-class comments;
- Different treatment of comparable coworkers;
- A harassment complaint;
- A disability or pregnancy disclosure;
- A request for accommodation;
- A sudden negative review after protected activity; or
- A layoff selection process with suspicious patterns.
Retaliation and wrongful-termination claims
A broad release may cover claims that the employee was fired for reporting discrimination, harassment, wage violations, illegal conduct, safety issues, FMLA use, or another protected activity.
Preserve the timeline before signing. The timing between a complaint and termination may be important, but it should be evaluated with employer knowledge, prior performance, and the stated reason.
FMLA and disability-accommodation claims
Severance agreements may release existing FMLA interference or retaliation claims as well as disability-discrimination or failure-to-accommodate claims.
Review whether the employer:
- Denied qualifying leave;
- Counted protected absences against you;
- Fired you during or after medical leave;
- Refused a finite leave extension;
- Required you to be “100% healed”; or
- Ignored medical restrictions or another accommodation request.
Wage, overtime, bonus, and commission claims
Many releases use very broad language covering compensation disputes. Wage-law waivers can involve special rules, and money already earned should be separated from new severance consideration.
Before signing, compare the agreement with:
- Final paycheck;
- Overtime history;
- Commission plan;
- Bonus plan;
- PTO policy;
- Expense reimbursement; and
- Payroll deductions.
Age-discrimination claims have special waiver rules
Employees age 40 or older who are asked to waive ADEA claims receive protections under the Older Workers Benefit Protection Act.
For an individual termination, a valid ADEA waiver generally must provide at least 21 days to consider the agreement and at least seven days after signing to revoke the waiver. In a qualifying group termination or exit-incentive program, the consideration period generally increases to 45 days and additional written disclosure requirements apply.
The agreement must also be understandable, specifically refer to ADEA rights, advise the employee in writing to consult an attorney, provide additional consideration, and not waive claims arising after execution.
Can a release stop you from filing with the EEOC or another agency?
A severance agreement generally should not prevent an employee from filing a charge, communicating truthfully with a government agency, or participating in an agency investigation.
However, agreement language can affect whether the employee may personally recover money on certain released claims. This is one reason agency-rights clauses should be read carefully.
New Jersey confidentiality and non-disparagement limits
New Jersey law restricts provisions whose purpose or effect is to conceal details relating to discrimination, retaliation, or harassment claims. A severance agreement should not be reviewed as though every confidentiality or non-disparagement clause is automatically enforceable.
The wording and subject matter matter.
What to highlight before signing
- Definition of “Released Claims”;
- Releasees: employer, parent, affiliates, executives, managers, insurers, benefit plans;
- Known and unknown claim language;
- Cutoff date for released conduct;
- Wage and commission language;
- Agency-filing carveouts;
- Confidentiality and non-disparagement;
- Cooperation clauses;
- No-rehire provision;
- Restrictive covenants;
- Indemnification or repayment terms;
- Age-waiver language;
- Signing and revocation deadlines; and
- The exact severance consideration.
How to value the release
No formula tells every employee whether severance is “enough.” Useful questions include:
- What claims may exist?
- What evidence supports them?
- What damages may be available?
- What defenses will the employer raise?
- How much compensation is already owed regardless of the release?
- How important are health benefits, reference language, equity, or restrictive-covenant changes?
- What are the employee’s financial and career priorities?
What a release should not make you falsely admit
Some agreements combine a release with factual representations. Read statements such as:
- “I have been paid all wages owed.”
- “I have not experienced discrimination or retaliation.”
- “I voluntarily resigned.”
- “I have no workplace injury or leave claim.”
- “I am not aware of any legal violation.”
Do not sign factual statements that you know are inaccurate simply because they appear in a standard severance form. Those representations can create problems separate from the release itself.
Who are you releasing?
Many agreements release more than the company named on the letterhead. The definition of “Released Parties” may include:
- Parent and subsidiary companies;
- Affiliates;
- Executives and managers;
- Employees and agents;
- Benefit plans;
- Insurers;
- Successors and assigns; and
- Other broadly defined entities.
That matters when the employee has a claim involving an individual manager, a parent company, a benefit plan, or another related entity.
What rights may remain even after a release?
A properly drafted severance agreement may preserve rights such as:
- Enforcing the severance agreement itself;
- Vested retirement benefits;
- COBRA rights;
- Workers’ compensation rights that cannot be waived in the same manner;
- Unemployment rights subject to state law;
- Truthful participation with government agencies;
- Claims arising after the agreement is signed; and
- Other specifically carved-out rights.
The carveouts should be read just as carefully as the release.
Do not let the signing deadline replace the claim review
A useful severance review looks backward before it looks forward. Reconstruct the final months of employment:
- What complaints did you make?
- What leave or accommodation did you request?
- What did your performance record show?
- Were you paid correctly?
- What reason was given for termination?
- Who was retained or selected in a layoff?
That history determines what the release may actually be worth.
Frequently asked questions
Does signing severance mean I cannot sue?
A valid release may waive covered existing claims. The exact language and enforceability matter.
Can I waive a claim I do not know I have?
Many releases attempt to cover known and unknown existing claims. Some statutes impose additional waiver requirements.
Can I waive future discrimination?
Agreements generally cannot validly waive claims based on unlawful conduct that happens after execution in the same way they waive existing claims.
Do I lose my right to file an EEOC charge?
A severance agreement should not lawfully block filing or participating with the EEOC, though the release may affect personal recovery.
What if I am over 40?
A waiver of ADEA claims must satisfy OWBPA requirements, including special consideration and revocation periods.
Is the 21-day rule available to everyone?
No. The 21-day federal rule applies to qualifying individual ADEA waivers for employees age 40 or older.
Can the agreement waive unpaid overtime?
Wage claims can involve special statutory rules. Do not assume every wage waiver in a severance agreement is automatically enforceable.
Can my employer make severance depend on confidentiality?
Some confidentiality terms are lawful, but federal and New Jersey law can restrict provisions involving protected reports, agency communications, and discrimination or harassment details.
Should final wages be counted as severance?
Money already owed should be identified separately from new consideration offered for a release.
Can a severance release be negotiated?
Often yes, depending on leverage, company policy, legal claims, position, timing, and the employer’s goals.
Related Swartz resources
- What employees should know about severance packages
- Severance negotiation tips
- Wrongful termination attorneys
- How to prepare for an employment-law consultation
Review the release before you trade claims for severance
Swartz Swidler reviews severance agreements for employees in New Jersey, Pennsylvania, Philadelphia, and South Jersey. A review can identify what claims may be released, what rights remain, and which terms may be worth negotiating.
