Most Dallas employees who receive a severance agreement after termination have no idea what they are actually agreeing to. The document arrives with an HR representative explaining that the company is offering some pay, and that all you need to do is sign. The urgency is implicit. There is a deadline. There may be a suggestion that the offer will not last. And most employees, already stressed by the loss of income and uncertain about what comes next, sign within a day or two without reading the document carefully or understanding what they are giving up. Wrongful termination lawyers in Dallas who handle employment cases see the aftermath of these decisions regularly: a client who had a legitimate wrongful termination claim, sometimes a strong one, who signed it away for two weeks of severance pay.
A severance agreement is a contract, and like any contract it has terms that benefit one party more than the other. In this case, the terms almost uniformly benefit the employer. Understanding what the key provisions actually mean, what rights you are surrendering, and what legally required protections apply to your situation is essential before putting your signature on anything.
The Release of Claims: The Most Consequential Provision Most Employees Don’t Read Carefully
At the center of almost every severance agreement is a release of claims provision. This is the paragraph, or series of paragraphs, in which you agree to give up your right to sue the employer for anything related to your employment or termination. The language is typically broad and covers all claims, whether known or unknown, arising under federal law, state law, or common law, that you had or have or may have had in the future relating in any way to your employment.
That breadth is intentional. It encompasses discrimination claims under Title VII, the ADA, and the ADEA. It covers retaliation claims. It covers breach of contract. It covers wage and hour violations. If you have a wrongful termination claim that would entitle you to back pay, front pay, compensatory damages, and attorney’s fees, signing a release extinguishes all of it in exchange for whatever severance the employer is offering.
The dollar amounts involved matter. An employer offering two weeks of severance to an employee who was fired for discriminatory reasons may be purchasing the release of a claim worth six figures in back pay alone, plus compensatory damages and attorney’s fees the employer would otherwise have to pay. The severance is not generosity. It is the purchase price of a legal waiver, and the employer has already had employment counsel review the agreement to make sure it is enforceable. The terminated employee typically has not had anyone review it at all.
The ADEA Rules That Apply If You Are 40 or Older
Federal law provides specific procedural protections for employees over 40 who are asked to waive age discrimination claims as part of a severance agreement. The Older Workers Benefit Protection Act, which amended the ADEA, requires that any valid waiver of age discrimination claims meet a specific set of requirements that go beyond what most employers explain at the exit meeting.
The agreement must specifically refer to ADEA claims by name. It must advise the employee in writing to consult with an attorney before signing. It must give the employee at least 21 days to consider the agreement, or 45 days if the termination is part of a group layoff or exit program. And after signing, the employee has 7 days to revoke the agreement, during which time the waiver is not yet effective.
Employers who pressure workers over 40 to sign severance agreements the same day as termination, who fail to include the required language referring to the ADEA, or who do not provide the statutory review period may have produced an agreement that is unenforceable with respect to age discrimination claims. An employee who signed under these conditions has not necessarily waived those claims, regardless of what the document says.
In group layoff situations, the requirements are even more specific. The employer must provide a list of the job titles and ages of all individuals selected and not selected for the layoff program, so that the employee can assess whether the selection process had an age-discriminatory pattern. Failure to provide this disclosure in a group termination is a defect that can affect the validity of the age claim waiver in the agreement.
Rights You Cannot Sign Away No Matter What the Agreement Says
Severance agreements routinely contain language purporting to cover “all claims of any kind,” but federal law limits what can actually be waived through a private agreement. These limitations exist regardless of what the severance document states.
You cannot waive the right to file a charge with the EEOC. A severance agreement that purports to bar you from contacting the EEOC, filing a discrimination charge, or participating in an EEOC investigation is invalid with respect to those provisions. You can agree not to accept monetary recovery from an EEOC proceeding, which is a separate and common provision, but you cannot be required to give up the right to file the charge itself.
You generally cannot waive future claims that arise after the date of signing. The release covers what you knew or should have known about at the time of signing, not events that have not yet occurred. You also cannot waive vested pension or retirement benefits under ERISA, and you cannot waive rights to workers’ compensation benefits that were already filed prior to the agreement in most circumstances.
Provisions in a severance agreement that prohibit you from ever working for competitors, that require you to repay severance if you pursue any legal claim, or that bar you from reporting illegal activity to a government agency may also be unenforceable depending on the specific circumstances. These are exactly the kinds of clauses that an employment attorney will identify on review and that most employees would not recognize as problematic without guidance.
Non-Disparagement and Confidentiality: What These Clauses Actually Prevent
Almost every severance agreement includes a non-disparagement clause requiring you not to make negative statements about the employer, its officers, employees, or products. Some also include a confidentiality clause prohibiting you from disclosing the terms of the agreement or the circumstances of your termination. These provisions have real practical consequences.
A non-disparagement clause does not prevent you from filing an EEOC charge or participating in a government investigation. The NLRB has also taken the position in recent guidance that overly broad non-disparagement clauses in severance agreements may violate the National Labor Relations Act by chilling protected concerted activity. A clause that prohibits you from discussing wages or workplace conditions with coworkers may be unenforceable even if you signed it.
Confidentiality clauses can create complications for future employment references if you are not permitted to discuss the terms of your departure. Understanding what you can and cannot say under the specific language of your agreement, and what consequences attach to a violation, is something an attorney can clarify before you sign rather than after you have already disclosed something inadvertently.
Why the Pressure to Sign Quickly Should Be a Warning Sign
Employers who present severance agreements at the exit meeting and push for same-day signatures know exactly what they are doing. The terminated employee is at maximum emotional and financial stress. They have not had time to assess their legal situation. They have not spoken with an attorney. And they are being offered money, which creates pressure to accept before thinking through what they might be giving up.
Even without the ADEA’s mandatory review period, there is rarely a legitimate reason why a severance agreement cannot survive the employee taking a few days to have it reviewed by an employment attorney. If an employer withdraws an offer because you requested time to consult with a lawyer, that reaction tells you something important about why they wanted you to sign quickly. A severance offer that cannot withstand professional review is a severance offer you probably should not accept on the terms presented.
Talk to Wrongful Termination Lawyers in Dallas Before You Sign Anything
Having a severance agreement reviewed by an employment attorney before signing is not an adversarial act. It is a basic protection against making an irreversible decision without adequate information. The consultation may reveal that the agreement is reasonable given your circumstances and that accepting makes sense. It may also reveal that you are releasing claims worth considerably more than what is being offered, or that provisions in the agreement are unenforceable and should be negotiated.
The Mundaca Law Firm’s wrongful termination lawyers in Dallas review severance agreements for terminated employees and assess whether the terms are fair in light of the specific circumstances of the termination. The firm also represents employees in negotiating improved severance terms when the initial offer does not reflect the actual legal exposure the employer faces. Do not sign a severance agreement before speaking with an employment attorney. Contact The Mundaca Law Firm to schedule a consultation while the review period is still open.
