A severance agreement is a contract that employers offer to employees to lay out the terms of the employee’s termination or departure and the severance payment. 

Severance agreements are 100% negotiable. There are standard, boilerplate terms that lawyers tend to use in severance agreements, and some terms are required by law to waive certain claims, such as the 21-day consideration period and 7-day revocation period required for certain waivers of age discrimination claims. But ultimately, all terms are negotiable. And as an employee, you should negotiate your severance agreement. 

The main benefit severance agreements provide to employees is additional compensation and benefits. In Illinois, most employers are not required to provide severance packages for their employees, but many do provide them. Companies offer severance agreements for three reasons: 

• To pay some additional amount of money to help ensure the goodwill of the company among departing employees; 
• To get you, the employee, to waive claims against the company so you cannot sue the employer later for discrimination, harassment, retaliation, unpaid commissions, etc.; or 
• A mixture of those. 

Severance agreements are also usually offered in the event of a layoff. 

If you are offered a severance agreement at your job and you are unsure if you agree to the terms of the agreement, reach out for help reviewing the agreement. You should not sign and agree to anything unless you fully know what you’re agreeing to! 

They can be used in situations like the following: 

• Layoff 
• Termination 
• Retirement 
• Resignation 

Severance agreements can provide employees with some financial benefits, such as a lump sum payment, if they leave their current position. Severance packages can also include additional benefits like health insurance or COBRA reimbursement. There is not a specific value that a severance package must meet; it is up to the employer to determine the value. This could vary by employee as well based on their position, length of employment, and pay. 

This can vary. Employers usually offer some amount of pay, sometimes expressed as a matter of weeks or months of pay, and non-financial benefits. However, there are often terms you need to fully understand hidden in the agreement, including: 

• Release of claims 
• Non-compete agreement 
• Confidentiality agreement 
• Non-disparagement clause 
• Clauses affecting IP rights 
• Clauses affecting stock or equity rights
• Clauses where you agree to assist the company for free in the future 

Agreeing to a release of claims could potentially be dangerous for an employee. If the employee was wrongfully terminated for discriminatory reasons, agreeing to a release of claims could mean the employee loses their right to sue the employer for those claims. 

This is something you definitely want to keep an eye out for before agreeing to a severance agreement. If you are unsure, contact a Chicago employment attorney and have them look over the agreement with you. 

A non-compete agreement is something employers have employees sign in order to ensure that the employee does not go and work for a competitor once they leave their position. Non-competes can be very limiting to the employee. A non-compete could prevent an employee from working for competitors in the same field or in the same geographic area for a period of time. It could also restrict an employee from working with clients from their previous position. 

Non-competes can be very harmful to an employee. Illinois law places specific restrictions on when non-compete agreements are enforceable, including requirements related to an employee’s compensation and the reasonableness of the restrictions. If a non-compete is included in your severance agreement, you will want to review it with a Chicago employment attorney to determine whether it may be enforceable under Illinois law. This is ideally something you want to look out for and negotiate before signing a severance agreement. 

An employer can include a confidentiality agreement in a severance agreement to require the employee to maintain confidentiality involving workplace matters. This can limit the employee when it comes to their ability to discuss certain matters or pursue certain claims. 

Agreements often have a benign-sounding clause regarding the return or destruction of company property, documents, or materials. Beware of these clauses. 

Before agreeing to a severance agreement with any of these additional agreements, contact a Chicago severance agreement lawyer to protect yourself from future employment problems. 

The amount of time you have to decide can vary depending on the terms of the agreement and the claims being waived. Certain severance agreements may provide a 21-day consideration period, such as agreements containing a waiver of age discrimination claims. But, as a practical matter, even the time frame for signing a severance agreement may be negotiable. 

The timeline on severance agreements is often very short, so you should reach out to a Chicago severance agreement lawyer to review it with you as soon as possible. Do not wait until the day or two before it is due to be signed. You can lose valuable leverage if you do! 

Depending on the terms of the agreement and the claims being waived, you may have a period of time to revoke it. For example, certain agreements that waive age discrimination claims provide a seven-day revocation period after signing. However, not every severance agreement includes a revocation period. 

It is best to act fast on such a tight schedule. If you agreed to severance and are not sure you made the right decision, call a Chicago severance agreement lawyer as soon as possible. 

The Older Workers Benefit Protection Act (OWBPA) and the Age Discrimination in Employment Act (ADEA) give extra protections to workers over the age of 40. Employers must meet certain requirements when asking these employees to waive age discrimination claims. 

The OWBPA requires employers to follow a specific timeline to obtain a valid release of ADEA claims. Generally, the employee has 21 days to consider the agreement. Once offered a severance agreement, you may have to decide whether to release your age discrimination claim and accept the severance. You should discuss the practical considerations of your age discrimination claim with your attorney so you can make the decision that is best for you, your family, and your career. 

Again, this is a tight timeline for such a big decision. It is best to contact a Chicago severance agreement lawyer as soon as possible to get started on the process. An attorney can help you determine whether the severance is fair and reasonable or whether it should be further negotiated.