A severance agreement is a contract where an employer pays you something extra when you leave, usually severance pay or benefits, and in return you release your legal claims against it. If you're 40 or over, US law gives you at least 21 days to consider it (45 in a group layoff) and 7 days to change your mind after signing. Whatever you sign, you can still file a charge with the EEOC.
Most of the protection comes from the Older Workers Benefit Protection Act (OWBPA), which Congress added to the Age Discrimination in Employment Act in 1990. The Equal Employment Opportunity Commission (EEOC) has published a detailed Q&A on what makes these waivers valid, and it's the best official guide to what you're signing.
What a severance agreement usually contains
- The termination date.
- The severance payment, often a number of weeks' pay, and whether it's a lump sum or paid over time.
- Benefits, such as continued health cover.
- References and how the departure will be described.
- Return of company property.
- A release of claims against the employer, which is the heart of the deal.
- Sometimes confidentiality and non-disparagement clauses.
The OWBPA rules if you're 40 or over
For a waiver of age discrimination claims to be 'knowing and voluntary', the EEOC says it must meet seven requirements. Miss any one and the waiver is invalid and unenforceable, and the employer can't cure it with a follow-up letter.
| Requirement | What it means in practice |
|---|---|
| Written so it can be clearly understood | Plain language aimed at the average person eligible, not legal jargon |
| Names the ADEA | It must refer to the Age Discrimination in Employment Act by name |
| Advises you in writing to consult an attorney | 'You've had time to consult a representative' isn't enough |
| At least 21 days to consider | Runs from the final offer; a material change restarts the 21 days |
| 7 days to revoke after signing | This period can't be changed or waived by either side |
| No waiver of future claims | Only claims up to the signing date can be released |
| Something extra in return | Consideration beyond what you're already entitled to |
In a group layoff, which the EEOC calls an exit incentive or other termination program, you get at least 45 days instead of 21, plus written information about the 'decisional unit' and the job titles and ages of those selected and not selected. That information lets you see whether older workers were picked disproportionately.
The rights you keep, whatever you sign
- Filing an EEOC charge: no agreement can stop you filing a charge or taking part in an EEOC investigation, and clauses that try are unenforceable.
- Keeping your severance if you file an EEOC charge: the EEOC says you can't be required to return it for that.
- Under the ADEA, you don't have to return severance before bringing an age claim, and an employer can't stop paying promised severance because you challenge the waiver.
- Your labor law rights: in the 2023 McLaren Macomb decision, the NLRB held that offering a severance agreement that broadly waives employees' rights under the National Labor Relations Act is unlawful.
The EEOC's sourced example worth knowing: a waiver of discrimination claims was found not knowing and voluntary because, although the language was 'clear and unambiguous', it never specifically mentioned employment discrimination claims, and the employee had limited education and no familiarity with the law. Clarity of wording isn't the only test.
Do you have to be offered severance?
In the US, generally no: severance is a matter of contract or company policy, and being 40 or over doesn't entitle you to more than a younger colleague, the EEOC says. Other countries differ. In Ontario, for example, severance pay can be a legal minimum, which our Ontario severance pay guide explains, and the UK uses settlement agreements with their own rules. If you're in an at-will job, our guide to at-will employment covers what you're owed without one.
What's usually negotiable
- The amount, especially if you've got strong service or you're giving up a real claim.
- How the payment's made: lump sum or spread out, which can matter for tax and benefits.
- The reference wording and an agreed announcement.
- A mutual non-disparagement clause instead of a one-way one.
- Keeping a laptop or phone, or the timing of your last day.
- Continued health cover for a set period.
You won't get all of these, but asking costs nothing, and the worst answer is usually just no.
How to review one before signing
- Count the days you've been given and note when the 7-day revocation window ends.
- Check what you're releasing and whether it names the ADEA if you're 40 or over.
- Compare the payment with what you'd get anyway, such as accrued vacation, to see the real extra.
- Look for confidentiality, non-disparagement and clawback terms.
- Get advice: the agreement should tell you to, and it's usually worth it.
Some rights cannot be signed away, so see how whistleblower protection works to know which ones.
The verdict
A severance agreement is a trade, and you're allowed to take your time over it. Use the full consideration period, check the seven OWBPA boxes if you're 40 or over, and remember that the right to go to the EEOC can't be bought. Negotiate the things that are negotiable, like the amount, the reference and a mutual non-disparagement clause, before you sign, not after.
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Separation documents often include a clause about public comments, so read up on what a non-disparagement clause can stop you saying.
Frequently asked questions
What is a severance agreement?
A contract in which an employer gives a departing employee pay or benefits beyond what they're owed, in exchange for a release of legal claims.
How long do you get to sign a severance agreement?
If you're 40 or over, at least 21 days from the final offer, or 45 days in a group layoff, plus 7 days to revoke after signing.
Can I still file an EEOC charge after signing a severance agreement?
Yes. The EEOC says no agreement can limit your right to file a charge or take part in an EEOC investigation.
Am I entitled to severance pay in the US?
Generally not by law. Severance depends on your contract or company policy, and age alone doesn't entitle you to more.
Can I change my mind after signing a severance agreement?
If you're 40 or over and the agreement waives age claims, yes: OWBPA gives you 7 days after signing to revoke, and that period can't be shortened or waived. Outside that rule, it depends on the agreement's own terms, so read the revocation clause before you sign.
Must I return my severance if I file an EEOC charge?
No. The EEOC says you can't be required to return severance pay or other consideration for filing a charge or taking part in an EEOC investigation, and under the ADEA you don't have to return it before bringing an age claim.
