Reading Between Enemy Lines

  • A severance offer's language itself often reveals how much liability the employer believes it faces. Standard severance agreements are largely boilerplate—defined consideration, release of claims, restrictive covenants—but sophisticated companies tailor language strategically when they know serious exposure exists.

    If the release contains unusually broad language attempting to capture claims the company anticipates (e.g., explicit carve-outs for claims that cannot be waived, specific reference to ADEA violations despite no obvious age claim, or extraordinary detail about wage and hour compliance), these are red flags that company counsel identified those specific risks.

    Similarly, the structure of the consideration often signals internal liability assessment. A standard offer provides severance pay that meets industry custom (one week per year of service for low-level workers; one month per year for executives). When the company offers substantially above custom—say, three months for a five-year employee when two weeks is market—this is rarely generosity; it typically reflects a settlement posture for a specific, quantified claim.

    Conversely, when an offer includes non-cash sweeteners (extended healthcare, outplacement services, equipment retention) rather than increased cash, the company may be signaling cash-flow constraints or an intent to minimize the economic damages baseline it might face in litigation.

  • The mechanics of payment delivery contain strategic signals. Standard severance pays in installments aligned with normal payroll cycles (biweekly or monthly). Offers that provide a lump-sum payment—particularly with requirements for immediate execution and short "revocation windows"—often indicate the company wants to close exposure quickly, suggesting it perceives the claim as time-sensitive or the statute of limitations as approaching.

    Installment-based payments, conversely, create ongoing leverage; the company is signaling it wants to maintain performance obligations or ongoing restrictions (typically non-disparagement, confidentiality, cooperation clauses). If the offer includes "conditional" severance—withholding final payment pending cooperation with investigations, non-compete enforcement, or reference verification—this is explicitly tying the consideration to leverage over post-severance behavior, a tactic companies use when they believe they face ongoing exposure or need the employee's silence.

    The offer's treatment of equity vesting and bonus acceleration also reveals internal risk assessment. If the company accelerates RSU vesting or pro-rates annual bonuses generously, it signals either genuine "no hard feelings" intent or an attempt to remove the ongoing leverage the employee would otherwise possess. An offer that provides minimal equity treatment, forcing the employee to forfeit cliff dates or unvested bonuses, suggests the company views the employee as low-leverage and replaceable—useful context for negotiation strategy.

  • The most critical forensic indicator is whether the document is labeled "Severance Agreement" or "Separation and Settlement Agreement." Severance is the default legal instrument for termination; it's what companies offer to avoid litigation risk and establish finality. Settlement language—phrases like "in consideration of the mutual waiver and full and final settlement of any and all claims," explicit reference to "potential claims," or language addressing "disputes," "alleged violations," or "claims arising from or related to employment"—indicates the company is treating this as a settlement with known claims in play.

    A severance offer that includes settlement language is the company's way of confirming, without admission, that specific violations occurred and value is being exchanged for silence. This distinction is crucial for negotiation positioning: if you're being offered a "settlement," the amount should be valued against the cost of litigating the underlying claim, not against mere severance custom.

    Additionally, watch for asymmetrical release language: agreements that require the employee to release all claims but permit the company to retain the right to enforce restrictive covenants, defend claims, or pursue counterclaims signal unequal risk allocation. Sophisticated negotiators demand mutual releases with equal carve-outs.

    The presence of unusual carve-outs—for example, "Employee retains the right to file administrative charges with the EEOC or participate in EEOC investigations but waives the right to recover damages"—is company counsel's attempt to comply with EEOC policy while limiting exposure; a signal that there could claims on the table.

    This is general process-oriented advice and does not constitute legal advice nor am I your attorney, although I can be. www.severance.co