Exiting a Job? Here’s What to Know Before You Sign That Severance Agreement
As a lawyer, I get my fair share of late-night texts and quick calls from friends and family about random legal questions. But one topic keeps coming up again and again, especially lately, with so much uncertainty in the job market:
“I got let go and they made me an offer, what should I be thinking about before signing a severance agreement?”
Whether it’s a voluntary exit, a restructuring, or a tough situation that’s reached a breaking point, the moment you’re stepping away from a job is emotionally charged. You may be juggling disappointment, frustration, relief, or all three at once. And then comes a long, legal-looking document that you’re expected to sign… quickly.
Here’s my high-level advice, whether you’ve already been handed a severance agreement or are preparing for that conversation.
Step One: Reflect Before You Negotiate
Before diving into negotiation mode, pause and get clear on what actually matters to you.
Yes, money is important. But it’s not the only thing. I encourage clients and friends to take stock of what will have the greatest impact on their life after the exit.
Here’s a simple exercise I recommend:
✅ Make a list of your priorities. These might include:
A financial runway while you look for what’s next
Preserving your professional reputation
Keeping access to your client or contact list
Freedom to consult, freelance, or start your own business
A positive external message about your departure
Health insurance continuation
Accelerated equity vesting or cash out options
✅ Then, rank each item in terms of importance.
✅ Highlight any non-negotiables, i.e. the terms you’re not willing to walk away from.
This personal clarity will keep you focused during negotiations. It prevents you from fixating on the severance check alone while overlooking other factors that might matter more in the long run.
4 Key Contract Terms to Watch and Why They Matter
When you receive a severance or exit agreement, it’s easy to get lost in the emotions and then glaze over legalese. But these four provisions can significantly impact your future:
1. Non-Disparagement
What it is: A clause that prohibits you (and sometimes the company) from making negative statements about each other.
Why it matters: This protects your professional reputation. Especially if you’re in a small industry, a mutual non-disparagement clause ensures that doors stay open and your exit doesn’t come with a silent asterisk.
2. Release of Claims
What it is: You agree not to sue the company over anything related to your employment.
Why it matters: This is usually the legal consideration for receiving severance at all. But if you have potential claims, discrimination, unpaid wages, or retaliation, this becomes a major bargaining chip. Talk to a lawyer before waiving rights you may not even realize you have.
3. Equity
What it is: How your RSUs, stock options, or other equity awards are handled.
Why it matters: Equity can be one of the most valuable parts of your compensation. Know the answers to these:
Will unvested equity accelerate?
Do you have a window to exercise options?
Is your departure considered a termination without cause (which might trigger vesting)?
If this isn’t addressed, ask for it.
4. Non-Compete / Non-Solicitation
What it is: Restrictions on where and how you can work after leaving.
Why it matters: These can limit your ability to earn a living or launch a new venture. Check:
Duration: Is it 3 months or 2 years?
Scope: Does it apply only to direct competitors, or any business that’s “related”?
Geography: Does it block you locally or worldwide?
If you’re in a state like California, where non-competes are largely unenforceable, these clauses still matter, especially if your company is out-of-state or you’re bound by another state's law in the contract.
A Note on Leverage and Realistic Expectations
Here’s a tough truth: severance agreements aren’t usually negotiated like real estate deals. Unless you have clear leverage (a legal claim, significant tenure, or unique value), most companies won’t dramatically revise the offer on the table.
That said, there’s often room to improve the terms, especially on timeline, messaging, mutual protections, and equity. The key is to approach it with professionalism and realism. Don’t overplay your hand, but don’t sell yourself short either.
Final Thought: Don’t Do This Alone
Exiting a job can be emotional, stressful, and at times overwhelming. It’s a transitional moment and like most transitions, it’s one where clear thinking is tough.
Before you sign anything binding, talk it out with a lawyer, trusted advisor, or even a friend with a clear head. You don’t have to navigate this alone.
You’ve got options. Make sure you know them.
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This post is for informational purposes only and does not constitute legal advice.