5 things to check in a severance agreement before you sign

You've just been let go. HR hands you a severance agreement and says you have a few days to sign. The package looks fair. What most people don't realize is that severance agreements are written entirely in the employer's favor — and they often contain clauses that trade away rights worth far more than the payout itself. Here are the five things ScrubMyCase looks for every time.

1. The release of claims clause

This is the most important line in any severance agreement. By signing, you are legally releasing the company from any claim you might have — discrimination, wrongful termination, unpaid wages, anything. Check whether the release covers only claims up to your termination date or extends to future claims, and whether it specifically names discrimination claims under Title VII, the ADEA, or the ADA. A broad release can extinguish a lawsuit worth multiples of your severance. Red flag: language like 'any and all claims, known or unknown, arising from the beginning of time.' That is not a standard clause — that is a trap.

2. The non-disparagement clause

You agree not to say anything negative about the company. But check whether it's mutual. Most agreements only bind you — the company can say whatever they want about you to future employers. A well-negotiated agreement is mutual. Also check whether there are carve-outs for truthful statements to government agencies, and whether violating the clause lets them claw back your severance.

3. The non-compete and non-solicitation terms

Some severance agreements introduce or extend non-compete restrictions as a condition of receiving the payout. Check how long it runs, what geography it covers, and whether it prevents you from working in your entire field or just with direct competitors. Also check enforceability: several states — California, Minnesota, North Dakota — will not enforce non-competes at all. Red flag: a non-compete added at severance that wasn't in your original employment contract. You are being asked to give up something new in exchange for money you may already be owed.

4. The clawback provision

Some agreements let the employer demand the severance back if you violate any term — even a minor one. Check what triggers the clawback, whether it's limited to any violation or only material ones, and whether the clawback is limited to the severance amount or also includes attorney's fees and damages. Red flag: clawback language with no materiality threshold. One accidental LinkedIn post could cost you everything you were paid.

5. The COBRA and benefits language

Your health coverage ends when you leave. The agreement should address how long the company will cover COBRA premiums, if at all. Check whether the agreement states clearly when your benefits terminate and whether any COBRA contribution promise is written into the agreement itself — not just something HR told you verbally. Red flag: verbal promises about benefits that don't appear anywhere in the document. Verbal promises don't hold up.

What ScrubMyCase catches

When you upload a severance agreement, ScrubMyCase reads every clause and flags one-sided non-disparagement terms, releases that go beyond standard scope, non-competes added at termination that weren't in your original contract, clawback triggers with no materiality limit, and benefits promises that appear nowhere in the document. You signed it to move forward — make sure you know exactly what you gave up to get there.

Questions

This guide is general information, not legal advice. For your specific situation, talk to a licensed attorney.

More guides