How Long You Actually Have

The deadline on the letter is not always the deadline in the law.

If you’re 40 or older and the agreement asks you to waive age discrimination claims, the Older Workers Benefit Protection Act requires at least 21 days to consider it. If the termination is part of a group or program affecting more than one employee, that minimum rises to 45 days, and the employer must also disclose information about the group — including the job titles and ages of who was and wasn’t selected. That disclosure is genuinely useful, and it’s almost never explained to the people who receive it.

After you sign, you get 7 more days to change your mind. This revocation window cannot be shortened or waived, no matter what the agreement says, and the agreement doesn’t become legally effective until it passes. An employer must honor it even if you sign the very same day you received the offer.

Other requirements apply too: the waiver has to be written in plain language, it has to specifically name the age discrimination law, it has to advise you in writing to talk to a lawyer, and it can’t cover anything that happens after you sign. You also have to receive something beyond what you were already owed — the payment has to actually be consideration for the waiver, not just your normal severance under an existing policy.

If you’re under 40, none of these federal minimums apply. Your deadline is whatever the agreement says. That doesn’t mean you have no options — asking for more time is still a normal request, and it’s usually granted.

These same claims come up when people ask whether they have grounds to sue over how they were let go. That’s a different question from what this page covers — building a wrongful termination case is its own process, with its own deadlines.

What a Release Actually Covers

A general release typically waives a broad range of employment claims — discrimination, wrongful termination, and similar disputes — up to the date you sign it. It generally cannot reach claims that haven’t happened yet: something that occurs after you sign is outside its scope, no matter how broadly the release is worded.

A release is a contract, and contracts need consideration. The severance payment is that consideration, and it has to be something beyond what you were already entitled to — an employer generally can’t offer you a policy benefit you already had coming and call that the price of your signature.

Is it binding once you sign? Generally, yes, once any applicable revocation period has passed — which is exactly why the deadline and the review period matter so much before you get there.

The Clauses, One by One

A severance agreement is rarely just a release. It usually comes bundled with several other clauses, each doing a different job.

Confidentiality

This typically requires you to keep the terms of the agreement — and sometimes the circumstances of your departure — private. The current legal status of these clauses, and non-disparagement clauses alongside them, is genuinely unsettled right now.

A 2023 decision from the federal labor board restricted broadly worded confidentiality and non-disparagement provisions in severance agreements, holding that even offering one could interfere with employees’ rights under federal labor law. Since then, the board’s enforcement priorities and composition have shifted, and the agency’s own leadership has pulled back the memo that had directed aggressive enforcement of that decision. As of this writing, the underlying decision hasn’t been overturned and is still being applied, but signals from more recent board activity suggest it could be revisited. We’re not going to assert a settled position on something that isn’t settled. What survives either way: these are among the most commonly narrowed clauses in negotiation, and asking for a mutual, narrowly tailored version is a normal request, not an aggressive one.

Non-Disparagement

This restricts negative public statements about the employer, and sits under the same contested status described above. A version that’s mutual — restricting the employer’s statements about you, too — and narrowly defined is the most common negotiated outcome.

Supervisors and managers may be treated differently than other employees under the labor-law framework involved here, since not everyone is covered the same way. That’s a detail worth raising if it applies to you.

Non-Compete

This restricts where or for whom you can work for a period after you leave. Where these clauses stand right now — federally and by state — gets its own full section below.

Non-Solicitation

A distinct clause from a non-compete: it restricts you from recruiting former coworkers or soliciting former customers or clients, rather than restricting your next job outright. Courts and agencies tend to treat these more permissively than non-competes, though the scope — who it covers and for how long — is still worth negotiating.

Cooperation

This commits you to help with any future litigation or investigations involving your former employer. Asking for compensation for that time, if it ever comes up, is a normal and common request.

Return of Property, No-Rehire, Reference Language, and Repayment

Return-of-property clauses are administrative and rarely contested. No-rehire clauses close the door on returning to that specific employer. Reference language sets what a future employer will hear if they call to check — and it’s one of the easiest things to negotiate. Repayment or clawback provisions can require you to return some or all of the payment if you violate another clause; narrowing exactly what triggers repayment is worth asking about.

Non-Competes: Where Things Actually Stand

Here’s the full sequence, dated. The Federal Trade Commission issued a rule in April 2024 that would have banned most non-compete clauses nationwide. A federal district court set it aside before it ever took effect, in August 2024. The agency voted to dismiss its appeals in September 2025, and the rule was formally removed from the Code of Federal Regulations effective February 12, 2026. There is, as of today, no federal non-compete ban of any kind. Enforceability is governed entirely by state law.

The agency still has authority to challenge individual non-compete agreements it considers unfair, case by case, and it has used that authority. Losing the nationwide rule didn’t end federal attention to this issue — it changed the tool from a blanket rule to individual enforcement.

State law is where the real answer lives now, and it varies enormously. A small number of states prohibit non-competes for most employees outright. Others allow them but impose income thresholds — meaning the clause only applies above a certain salary — or procedural requirements like advance notice. We’re not going to publish a state-by-state table here; the details change too often, and the only version worth trusting is your own state’s current law. Look specifically for a wage threshold and any notice requirement when you check.

One more thing worth knowing: a non-compete included in a severance agreement is often newly imposed — it wasn’t part of your original employment terms. That makes it one of the most negotiable items in the whole package. If you’re asking how to get out of an existing one, the honest answer is that it depends entirely on your state’s law and the specific wording of your agreement. That’s a question for a lawyer familiar with your state, not a general tactic that works everywhere.

Will It Affect Your Unemployment?

Whether the severance payment itself affects your benefit amount or start date is a separate, state-by-state question. Some states treat a lump-sum severance payment differently from salary continuation. Some offset your weekly benefit during the period the payment is allocated to; others don’t count it at all. As one state unemployment agency’s own guidance shows, the details are specific and technical — and that’s true of every state’s rules, not just this one example. We’re not going to publish a 50-state table here, because it would be wrong within a legislative session. Check your own state’s unemployment agency for the current rule.

Apply promptly regardless of what you decide about the severance agreement, and report the severance payment accurately when your state asks about it. Accurate reporting is required — don’t take shortcuts here.

How the severance is structured in the agreement — lump sum versus continued salary payments, for instance — can affect how your state treats it for unemployment purposes. That makes payment structure a legitimate thing to raise in negotiation, not just a technical detail.

How Severance Pay Is Taxed

Severance pay is wages. It’s fully taxable, the same as the paycheck you were already receiving.

It’s generally treated as a supplemental wage for withholding purposes, which is why the check often looks smaller than you’d expect. Under current IRS guidance, employers commonly withhold a flat 22% for federal income tax on supplemental wages, rising to 37% on any amount above $1 million paid to one person in a year, on top of the usual Social Security and Medicare withholding. That withheld amount is not your final tax bill — it’s reconciled when you file, and depending on your total income for the year, you may get some of it back or owe more. The mechanics of why this withholding runs high, and how it reconciles at filing, are covered in more depth in why bonus and supplemental pay withholding looks so large.

One timing detail worth knowing: a lump sum landing in a single tax year can push your income into a higher bracket for that year than you’d otherwise expect, especially if you also worked several months at your regular salary. That makes the timing of the payment — whether it lands this year or next — a legitimate point to raise if you’re negotiating.

What’s Actually Negotiable

No federal law generally requires an employer to offer severance at all — it’s a benefit the company is choosing to provide, not a legal entitlement, with one narrow exception: employers covered by the WARN Act generally owe 60 days’ advance notice, or pay in place of it, before certain plant closings and mass layoffs. Outside of that specific notice obligation, severance itself is negotiable because it isn’t mandated to begin with.

Continuing your health coverage after a layoff has its own real cost, separate from the severance itself, and it’s one of the most commonly negotiated items in the whole package — see how COBRA coverage actually works and what it costs for the details.

How to ask: put the request in writing, be specific about what you want, and give a reason. Don’t bluff, don’t imply you have a claim you don’t actually have, and don’t invent leverage. An employer is generally free to decline any specific request. What’s also true is that withdrawing the entire offer because someone asked a reasonable question is uncommon — it isn’t in most employers’ interest to do that, but it isn’t impossible either.

Do You Need a Lawyer?

Many severance agreements are standard, and they don’t need a review. That’s the sentence a page built around booking consultations can’t write, but it’s true for a large share of the people reading this.

A flat-fee review — a lawyer reads your specific document and tells you what it does, for a set price, without taking on your case — is a distinct service from full representation, and it’s often exactly the right amount of help.

A review is genuinely worth paying for when the amount involved is large, when you’re part of a group termination with disclosures you want checked, when you suspect discrimination or retaliation was behind the decision, when a restrictive covenant has been newly added, when equity or executive compensation is part of the package, or simply when something in the document doesn’t make sense to you.

If you decide to look for help, your state bar association’s lawyer referral service and your state’s legal aid organizations are both good starting categories — see the American Bar Association’s guide to finding legal help for how these programs generally work. We’re not going to point you to a specific firm or a directory here.

What Happens If You Don’t Sign?

An employer generally isn’t required to provide severance at all, absent a contract, a written policy, or a statute that says otherwise. The narrow exception is the WARN Act notice obligation described above, which covers advance notice rather than severance pay itself.

If you decline to sign, the usual result is straightforward: you forgo the severance payment, and you retain whatever claims the release would have waived. Whether declining affects your unemployment benefits is, again, a state-specific question, and it depends on the reason for your separation more than on the severance decision itself.

This page won’t tell you which path to take. What it can tell you is what each path actually does, so the decision is yours to make with clear information rather than a manufactured deadline.

Frequently Asked Questions

Should I sign my severance agreement?

That’s your decision to make, based on your own situation — this guide explains what the document does and what your deadlines are, but it doesn’t tell you whether to sign.

How long do I have to decide?

At least 21 days if you’re 40 or older and the agreement includes an age-discrimination waiver, or 45 days if it’s part of a group termination. If you’re under 40, your deadline is whatever the agreement states.

Is it different if I’m over 40?

Yes. Federal law gives you a minimum consideration period and a revocation window after signing that only applies to waivers of age discrimination claims for people 40 and older.

What if it’s part of a group layoff?

Your minimum consideration period rises to 45 days, and the employer must also disclose information about the group of employees who were and weren’t selected.

Can I change my mind after signing?

Yes, if you’re 40 or older and the waiver covers age discrimination claims. You have 7 days after signing to revoke, and this window cannot be shortened or waived.

Can the employer shorten the deadline?

No. The federal minimums for those covered by them are floors, not suggestions, and the revocation period specifically cannot be shortened by agreement.

What am I actually giving up?

Mainly your right to personally sue over claims that existed before you signed — things like wrongful termination or discrimination. What survives regardless is listed in the non-waivable section above.

Can I still file a discrimination charge after signing?

Yes. That right cannot be waived by any severance agreement, no matter how it’s worded.

Can I still apply for unemployment?

Yes. Signing a release doesn’t affect your right to apply.

Will severance reduce my unemployment benefits?

It depends on your state and how the payment is structured. Some states offset benefits during the period the severance covers; others don’t. Check your own state’s unemployment agency.

Is severance pay taxable?

Yes. It’s wages, taxed the same as your regular paycheck.

Why was so much withheld from my severance check?

Severance is usually withheld as a supplemental wage, at a flat 22% federal rate (37% above $1 million), plus standard Social Security and Medicare. That’s a withholding rate, not your final tax bill.

Is there a federal ban on non-compete clauses?

No. A 2024 federal rule that would have created one never took effect, was set aside by a court, and was formally removed from the federal regulations in February 2026. State law now governs entirely.

Can I get out of a non-compete in my severance agreement?

It depends on your state’s law and the specific wording of the clause. There’s no general tactic that works everywhere — this is a question for a lawyer licensed in your state.

Can I negotiate a severance package?

Yes. Asking is normal, and common items like the amount, payment timing, health coverage, and reference language are frequently adjusted.

Will they pull the offer if I ask for more?

Usually not. An employer can decline a specific request, but withdrawing the entire offer because someone asked is uncommon.

Do I need a lawyer to review it?

Not always. Many agreements are standard. A review is worth it for large amounts, group terminations, suspected discrimination, newly added restrictive covenants, or executive compensation.

What happens if I don’t sign?

Generally, you forgo the payment and keep whatever claims the release would have waived. Whether it affects unemployment is a state-specific question.