At first glance, severance agreements may look like a generous offer. After all, your employer is giving you money that it does not legally owe you. But it’s important to remember that Companies offer severance agreements for a reason: to protect the company—not you. Severance agreements are contracts, and once you sign, you may be giving up important legal rights you didn’t even know you had. Before putting pen to paper, here are some of the most important things to look for and think about.

1. The Release of Claims

The central feature of almost every severance agreement is the release of claims. This means that, in exchange for the money or benefits offered, you agree not to sue the company for anything that happened during your employment. That includes claims for discrimination, harassment, retaliation, unpaid wages, and other legal violations.

For example, if you believe you were fired after reporting sexual harassment, signing the agreement may permanently prevent you from filing a lawsuit. Many employees don’t realize this until it’s too late. Before you give up those rights, it’s worth talking to an attorney who can help you assess whether your potential claims are worth more than the severance payment on the table.

2. Confidentiality and Non-Disparagement Clauses

Severance agreements often go beyond waiving legal claims. Many contain confidentiality provisions that prohibit you from discussing the terms of the agreement, sometimes even with coworkers or friends. Others include non-disparagement clauses, which prevent you from saying anything negative about the company—even if what you say is true.

Violating these clauses, even unintentionally, can put your severance pay at risk. For example, posting a single frustrated comment about your old boss on social media could lead to the company claiming you breached the agreement. These restrictions can be overly broad and intimidating, and you should know exactly how far they reach before agreeing to them.

3. Restrictive Covenants: Non-Compete, Non-Solicit, and More

Some severance agreements try to impose new limits on your future career. These may include non-compete clauses (preventing you from working for competitors), non-solicitation clauses (barring you from reaching out to clients or coworkers), or other restrictions.

In Texas, non-competes are enforceable under certain conditions, but that doesn’t mean they can’t cause you headaches. Even if a clause might not hold up in court, the company could still threaten enforcement, forcing you to spend time and money fighting it. Make sure you understand whether the agreement limits your ability to earn a living going forward.

4. Money and Benefits You’re Already Owed

Severance pay should be in addition to, not instead of, money and benefits you are already entitled to. For instance, Your final paycheck is non-negotiable—it’s legally owed.

Sometimes employers use severance agreements to blur this line, making it seem like you have to waive claims just to receive what you’re already owed. Be careful, and don’t leave money on the table.

5. Time to Review and Revocation Rights

If you are 40 years or older and the company wants you to waive claims under the Age Discrimination in Employment Act (ADEA), the law requires them to give you at least 21 days to review the agreement and 7 days to revoke it after signing. For group layoffs, the time period is even longer—45 days.

Even if you are under 40, you should not feel pressured to sign right away. Take the time to review carefully and, ideally, consult with a lawyer. A rushed decision is often one you regret later.

6. Negotiation Is Possible

Many people assume severance agreements are “take it or leave it,” but that isn’t always the case. Depending on your situation, there may be room to negotiate for more money, extended health benefits, a neutral reference, or changes to restrictive clauses. Employers often expect some negotiation, and having a lawyer involved can strengthen your leverage.

Final Thoughts

Severance agreements can be valuable, but they always come with strings attached. Signing one without fully understanding the consequences can mean giving up important rights or limiting your future opportunities. Before you sign, ask yourself: What am I giving up, and is the exchange worth it?

If you’ve been offered a severance agreement, don’t go through it alone. At Rob Wiley P.C., our role is to help employees understand their options, protect their rights, and, where possible, improve the terms of what’s being offered. A short conversation now can prevent big regrets later. If you’d like to discuss your severance agreement or any other employment issue you face, reach out to us at 214-389-5527 or Austin Employment Lawyers, P.C.