When an employer offers you a severance agreement, it may seem like a generous gesture—but it can also carry important legal implications. At‑will employment is the default in Massachusetts, meaning employers are not required to offer severance pay. Yet once offered, a severance agreement becomes a binding legal contract. Understanding what it is, what to watch out for, and how Massachusetts law affects your rights can help you protect your financial future.
What Is a Severance Agreement and Why Do Employers Offer Them?
A severance agreement is a written contract between you and your employer. In exchange for signing it—typically agreeing not to sue or make claims—you receive something of value beyond your final paycheck. Examples include:
- Severance pay (cash in a lump sum or salary continuation)
- Extended health insurance benefits or COBRA contributions
- Payout for unused vacation, PTO, or commissions
Employers offer severance agreements for several reasons: to reduce the risk of litigation, protect against wrongful termination or discrimination claims, enforce confidentiality or non‑compete terms, and achieve a clean termination of the employment relationship. In Massachusetts, once the offer is made, both sides must receive consideration (value) for the agreement to be enforceable.
As an Employee, What Are My Concerns About Signing a Severance Agreement?
Before signing anything, consider:
Waiver of Claims
You may be giving up your right to bring legal claims—including for discrimination (under state M.G.L. c. 151B), retaliation, unpaid wages, or other wrongful termination actions. Massachusetts law requires that any unpaid wages, commissions, or vacation owed under the Wage Act be paid regardless of whether you sign a severance agreement.
Deadline and Review Time
If you’re age 40 or older and the agreement includes a waiver of age-discrimination claims (ADEA), federal law requires the employer to give you at least 21 days to consider the agreement and 7 days to revoke after signing; if part of a group layoff, you get 45 days to review.
Enforceability of Restrictive Clauses
Massachusetts non-compete and non-solicitation rules restrict enforceability unless the agreement meets requirements like giving you garden‑leave or equivalent compensation and reasonable geographic scope.
Potential Penalties for Employers
If an enforceable severance agreement is not followed, under Massachusetts law, employers may face treble damages—three times the amount owed—if they fail to pay severance as promised.
As an Employee, What Should I Look for in a Severance Agreement?
When reviewing your severance offer, pay close attention to:
- Payment Terms: Is the severance a lump sum, salary continuation, or a combination? Confirm method and timing.
- Benefit Continuation: Will your employer continue health insurance or COBRA premiums?
- Release of Legal Claims: What rights are you waiving? Does it include wrongful termination, discrimination, or wage claims?
- Confidentiality / Non-Disparagement / Non-Compete Clauses: Are they overly broad? Are they legally enforceable under state law?
- Consideration: Are you receiving something beyond what you’re already entitled to, like unused PTO or earned commissions?
- Timing Provisions: Ensure federal review periods (if applicable) are clearly stated, and that revocation rights are included if you’re over 40.
Why You Should Consult an Attorney
Severance agreements are drafted to protect employer interests and may contain legal traps. Negotiating for additional pay, extended benefits, or narrowing restrictive clauses can significantly impact your future. Massachusetts lawyers encourage clients to involve counsel early to avoid errors and ensure fair treatment.
Even if you’ve already signed, there may be remedies—especially if you were pressured or not given the mandatory ADEA review period.
Take Action to Protect Your Rights
If you are offered a severance agreement, don’t rush. Carefully read the document, confirm that your final paycheck and earned benefits are separately guaranteed under the Wage Act, and respect any required consideration or deadlines.
Consulting an experienced Massachusetts employment attorney can help you negotiate better terms, clarify ambiguous language, identify illegal provisions, and preserve rights you might otherwise waive.
Contact our employment law team today for a confidential consultation. We’ll help you evaluate your severance agreement, negotiate favorable terms, and protect your legal rights.