Severance agreements are not gratuities — they are liability-control contracts drafted to neutralize claims and constrain a departing employee’s future options. The agreements bundle together releases of claims, restrictive covenants, payment terms, benefits, and post-employment obligations. To the extent your tenure was controversial with countless questionable incidents supporting potential claims — discrimination, retaliation, whistleblower activity, wage violations, false filings, or regulatory exposure — the severance agreement is potentially a gag order if you treat it as any ordinary exercise. From that perspective, the value of the release should be priced against risk: perceived liability, likelihood of discovery, publicity cost, and internal precedent. Because negotiating leverage exists only before signature, strategic review and considered thought — not blind acceptance — is critical for preserving optionality.
1. Review Periods and Revocation Rights
Federal and New York law build in review time before an employee can waive claims. Employees generally receive at least 21 days to review severance terms. Employees age 40 or older must be given the OWBPA-mandated 21-day review (45 days in group layoffs with mandated disclosure schedules) and a non-waivable 7-day revocation window after signing. Agreements that pressure immediate execution or omit statutory notices may be void.
2. Release, Waiver, and Speech-Related Restrictions
Most severance agreements require a release of claims. That release may be general or targeted, and once signed will bar litigation for discrimination, retaliation, wage claims, and most employment-related rights. But releases cannot lawfully prohibit employees from reporting unlawful conduct or cooperating with regulators. Two other speech-restrictions are now standard:
• Non-Disclosure / Confidentiality
— limits discussion of terms, process, or employer information; must not be written to suppress legally protected reports.
• Non-Disparagement — bars negative statements; should be mutual and should not enable the employer to damage rehire prospects.
Unilateral clauses are a structural red flag.
3. Restrictive Covenants: Non-Compete, Non-Solicit, Cooperation
Non-compete and non-solicitation clauses constrain post-employment earning capacity. In New York, enforceability turns on reasonableness — time, scope, and geography must be narrowly tailored to legitimate employer interests. Clauses that bar entire industries, geographies, or customer classes without limit are typically unenforceable. Non-solicitation provisions can trigger litigation even where customers or employees depart voluntarily. Cooperation clauses can extend months or years of unpaid obligations unless time-bound and compensated.
4. Money Terms: Severance Pay, Form, and Unemployment Consequences
Severance is not mandatory in New York unless required by contract, policy, or CBA. Where offered, payment structure matters:
• Lump sums reduce the risk of interrupted payments and often preserve unemployment eligibility.
• Installments can disqualify or delay unemployment.
• Retirement placement of severance does not generally change unemployment classification.
• Executive agreements frequently implicate stock, options, carried interest, deferred bonuses, and tax treatment requiring counsel.
5. Benefits Continuation: COBRA, Mini-COBRA, and Executive Perks
COBRA requires continuation for employers with 20+ employees for up to 18 months; New York’s Mini-COBRA can extend to 36 months for smaller employers. Employees may be charged up to 102 percent of premiums unless negotiated otherwise. Severance should expressly address health insurance timing, retirement contributions, life insurance, and status of unvested equity.
6. Negotiation Leverage: Where Value Is Created (Not Given)
Employers offer severance to buy peace. That fact creates leverage. Pressure points include potential claims (discrimination, retaliation, whistleblower, wage-hour), inconsistent internal precedents, below-market offers, and reputational risk. Negotiation gains are not only monetary. Equal mutuality, narrowing of overbroad clauses, health-benefit extensions, reference commitments, and removal of non-competes often produce larger lifetime value than marginal dollars. Structured negotiation through counsel recreates the leverage employers assume they neutralized.
8. Mandatory Notice of Right to Counsel
New York S372 now requires written notice of the right to consult counsel before execution; failure renders the agreement unenforceable. Retaining counsel before signature is not optional risk-management — it is the only point at which leverage exists.
The Real
A severance agreement is not a courtesy; it is a liability-management instrument engineered by the employer. Review windows, revocation rights, releases, restrictive covenants, benefits, and cooperation clauses all carry durable legal and financial consequences. Signed once, leverage is gone. Before you sign, treat the document as the last negotiation you will ever have with this employer — and negotiate it accordingly. Assuming it was not for cause, the termination was a business decision. They made theirs. Make yours.
