Severance Agreements

Severance Agreements: What You’re Giving Up, and What You’re Getting

A severance agreement usually arrives at the worst possible moment — hours after a termination, with a deadline attached and a number that may or may not be fair. Before you sign anything, it helps to understand what the document actually does: your employer is not giving you money out of goodwill; it is buying something from you, and the price should reflect what that something is worth. This overview explains where severance rights come from and routes you to our detailed pages. For how severance fits alongside the other agreements in an executive’s file, see our Executive Employment Contract Issues overview.

No One Is Entitled to Severance — Until They Are

There is no general law in DC, Maryland, or federally that requires an employer to pay severance. In an at-will arrangement, an employer can usually end the relationship without paying anything beyond final wages and whatever accrued leave its policies or local law require. But that baseline changes quickly: you may already have a right to severance if your employment contract or offer letter promises it, if your employer maintains a severance plan or an established practice of paying it, or — most often for executives — if your agreement defines what happens on a termination “without Cause” or a resignation for “Good Reason.” Whether your departure fits those defined terms can determine whether you leave with a year of pay and accelerated equity or with nothing.

What the Employer Is Really Buying

The heart of nearly every severance agreement is a release of claims: in exchange for the payment, you agree not to sue. That is the product being purchased, which is why the strength of your potential claims — discrimination, retaliation, whistleblower, wage — matters so much to the price, and why the timing of a termination (near a vesting date, or shortly after a protected complaint) is part of your leverage. The details of what a release covers, what it legally cannot take away, and how to evaluate one are on our review page below.

Start With the Page That Fits Your Situation

Not every severance agreement raises the same concerns. Whether you’ve been offered a standard separation package, are over 40 and entitled to additional legal protections, or are an executive negotiating equity, bonuses, and restrictive covenants, the details matter. Select the guide below that best fits your situation to understand what to look for, what rights you may be giving up, and what you should consider before signing.

I’ve Been Handed an Agreement and Need to Understand It

Reviewing a Severance Agreement: The Release and Your Rights — what you’re waiving, the rights no agreement can waive, the checklist to run before signing, and why first offers are rarely final.

I’m 40 or Older

Severance After 40: The OWBPA’s Special Rules — the federal rules that give you 21 or 45 days, a 7-day revocation right, written advice to consult counsel, and — in group layoffs — disclosures that sometimes reveal more than the employer intended.

I’m an Executive With Equity, a Bonus, or Restrictive Covenants in Play

Executive Severance and Separation Packages — Cause and Good Reason, vesting, bonus proration, non-competes, clawbacks, cooperation clauses, and the terms that quietly decide what a package is really worth.

Severance and Your Unemployment Benefits

Severance can affect when unemployment benefits begin, and the rules differ between DC and Maryland — in Maryland, severance allocated to weeks after your termination generally postpones benefit eligibility for those weeks. The structure and characterization of a payment can therefore matter as much as its size, and it is worth understanding before you agree to a payment schedule, not after.

Frequently Asked Questions

Am I entitled to severance when I’m let go?

Not automatically — no DC, Maryland, or federal law requires it. But entitlement arises more often than people think: from a contract or offer letter, from an employer’s severance plan or established practice, or from an executive agreement’s “without Cause” and “Good Reason” definitions. Whether your departure fits those terms can be the whole ballgame.

Why is my employer offering me money at all?

Because it is buying something: a release of your legal claims. The payment is the price of your agreement not to sue, which is why the strength of your potential claims — and the suspicious timing of some terminations — directly affects what the package should be worth. An offer priced before anyone evaluated your claims is priced by the employer alone.

Will taking severance delay my unemployment benefits?

It can, and the rules differ by jurisdiction. In Maryland, severance allocated to weeks after termination generally postpones benefit eligibility for those weeks — so how the agreement characterizes and schedules the payment matters as much as the total. Raise it as a drafting point before signing, not a surprise after.

Related practice areas

Your situation may also involve one of these related areas of employment law:

Bottom Line

A severance agreement is a transaction, and the first draft prices it entirely from the employer’s side. Understanding what you are selling — and whether the timing or circumstances of your termination gave you leverage — is the difference between accepting a form document and negotiating a package. Deadlines in cover letters are softer than they look; the release, once signed, is not.

BEFORE YOU SIGN

Have You Been Offered a Severance Agreement?
A severance agreement may affect your legal claims, compensation, and future employment opportunities. Wilkenfeld Law Office helps employees in DC and Maryland understand their options before signing.

Or call 301.245.3035 · Intake@WilkenfeldLO.com

This article provides general information and is not legal advice. Contacting us does not create an attorney-client relationship.

Reviewed by Ari Wilkenfeld, Esq. (DC Bar No. 461063; MD Bar No. 9806240300). Ari has over 27 years of experience litigating in federal and state courts, and before the U.S. Equal Employment Opportunity Commission (EEOC), the U.S. Merit Systems Protection Board (MSPB), and various arbitration panels. Ari has been recognized by Esquire Magazine as “a famously determined Civil Rights lawyer” and by the New York Post as “a high powered DC Lawyer.” Last updated: November 1, 2026.