A severance agreement is almost never the friendly document HR presents it as. It is a contract drafted by the employer’s lawyers, built to maximize the employer’s protection, and offered to an employee who has just been told they no longer have a job. The Mundaca Law Firm reviews severance agreements for NYC workers before they are signed, and the work usually involves spotting provisions the employee did not know to look for, identifying terms that violate New York’s post-2018 limitations on certain releases, and negotiating the parts most employees never realize are negotiable.

The deadline pressure is real. The pressure to sign immediately is not.

What a Severance Agreement Actually Does

A severance agreement trades money or extended benefits for a release of claims and a set of post-employment obligations. The employer typically gets a comprehensive release covering known and unknown claims, a confidentiality clause, a non-disparagement provision, sometimes a non-compete or non-solicitation, and a cooperation obligation that survives the separation. The employee gets a number on the table, sometimes some benefits continuation, and a closed door behind them.

The asymmetry of who drafted the document and who is signing it is the central feature. Reading it once, agreeing in principle, and signing fast is the most common way employees give away claims worth multiples of the severance amount.

OWBPA: The Federal Rules That Govern Age-Claim Waivers

Any severance agreement that releases age discrimination claims under the ADEA must comply with the Older Workers Benefit Protection Act (29 U.S.C. § 626(f)). For employees age 40 and over, the OWBPA requires specific elements: language calculated to be understood, specific reference to ADEA rights, consideration beyond what the employee was already entitled to, written advice to consult an attorney, at least 21 days to consider the agreement, and seven days to revoke after signing.

Group exit incentive programs trigger additional requirements under 29 C.F.R. § 1625.22. The employer must provide written disclosure of the decisional unit, the eligibility factors, the time limits, and the ages and job titles of all individuals selected and not selected for the program. The 21-day consideration period extends to 45 days in group programs.

A severance agreement that fails to satisfy OWBPA is unenforceable as to ADEA claims. The employee can keep the severance and still sue. That outcome surprises employers more often than it should, and it is one of the first things to check in any review.

New York’s Post-2018 Restrictions on Discrimination and Harassment NDAs

New York General Obligations Law § 5-336, enacted in 2018 and significantly expanded by the 2019 and 2023 amendments, restricts the use of nondisclosure provisions in agreements resolving claims of discrimination, harassment, or retaliation. An NDA covering this kind of claim can only be included if the complainant prefers it, and the agreement must give the complainant at least 21 days to consider the NDA term (which cannot be waived) and seven days to revoke. The NDA has to be written in plain English and in the complainant’s primary language. Release provisions that would require the complainant to lie about the underlying facts, or that prevent participation in agency investigations, are unenforceable.

The federal Speak Out Act of 2022 adds another restriction: pre-dispute nondisclosure and non-disparagement clauses in sexual harassment and sexual assault matters cannot be enforced. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, also from 2022, bars forced arbitration of those claims.

A severance agreement drafted without attention to these statutes will frequently include provisions that are unenforceable in part. The unenforceability matters less than the negotiation leverage it creates.

The Release Language That Catches Workers Off Guard

The release section is usually broad: “any and all claims, known or unknown, arising out of or in any way relating to” the employment. That language reaches further than most employees realize, capturing discrimination claims, retaliation claims, wage and hour claims, contract claims, and statutory claims under federal, state, and city law.

Some claims cannot be released. Workers’ compensation, unemployment benefits, vested ERISA benefits, the right to file a charge with the EEOC or NLRB (though personal monetary recovery can be limited), and certain whistleblower protections survive most release language. Carve-outs for these should be explicit.

Restrictive Covenants Hidden in the Severance Package

Non-disparagement clauses are nearly universal and are often drafted as one-way obligations running only against the employee. Mutual non-disparagement is negotiable. Non-compete and non-solicitation provisions in severance agreements should be evaluated against current New York law on enforceability, which has been actively changing. Cooperation clauses obligate the employee to assist the employer in future litigation or investigations and can produce surprising downstream burdens.

Negotiable Terms Most Workers Never Push Back On

Severance is a negotiation. Several terms are routinely adjusted when the employee asks:

• The severance amount itself, particularly when the agreement is offered in connection with conduct that could support a discrimination or retaliation claim
• The characterization of the separation (resignation, mutual, or termination without cause), which affects unemployment and reference questions
• Benefits continuation, including COBRA subsidization for a defined period
• Treatment of unvested equity, bonus pro-ration, and PTO payout
• Reference language, including a written neutral reference or specific approved language
• Mutual non-disparagement instead of one-way
• Carve-outs from the release for workers’ compensation, unemployment, vested benefits, and indemnification rights

How The Mundaca Law Firm Reviews a Severance Agreement

The first review pass identifies whether the underlying separation might support a discrimination, retaliation, or whistleblower claim that gives the employee leverage. If it does, the negotiation often produces materially better terms. The second pass checks OWBPA compliance, NY GOL § 5-336 compliance, and any other statutory requirements. The third identifies the negotiable terms the employer left on the table and the restrictive covenants that should be narrowed or removed.

That review usually takes hours and almost always changes what the employee signs.

Protecting Your Position

A severance agreement looks final, and the deadline always feels urgent. Neither is a reason to sign the first version of the document. Most employers extend their stated deadline by a week without resistance, OWBPA already provides at least 21 days for age-related waivers, and NY law guarantees the same for harassment and discrimination NDAs.

If you have been offered a severance agreement, The Mundaca Law Firm reviews severance agreements for NYC workers and can identify the red flags, the unenforceable provisions, and the negotiable terms before any deadline forces a signature.