A release of claims in a severance agreement is a legal provision where you waive your right to sue your employer for virtually all employment-related claims in exchange for severance benefits. You’re typically giving up rights to pursue claims for discrimination, harassment, wrongful termination, unpaid wages, breach of contract, and emotional distress—essentially agreeing never to take legal action against your employer for anything that happened during your employment up to the date you sign. While certain rights cannot be waived by law (including filed EEOC charges, workers’ compensation claims, and unemployment benefits), the release often covers claims you might not even know you have, which makes understanding these provisions crucial before signing any severance agreement.
Key Takeaways
- Release of claims provisions waive most legal rights against your employer, including discrimination, harassment, and wrongful termination claims
- Certain rights cannot be waived by law, including unemployment benefits, workers’ compensation, and already-filed EEOC charges
- Employees over 40 receive special protections under the Older Workers Benefit Protection Act (OWBPA), including 21 days to consider and 7 days to revoke
- Valid releases require “consideration”—something of value beyond what you’re already entitled to receive
- New York law provides additional protections and requirements for certain wage-related releases
- You can often negotiate the scope and terms of the release provisions
- Overly broad or improperly drafted releases may be unenforceable
Disclaimer: This article provides general information for informational purposes only and should not be considered a substitute for legal advice. It is essential to consult with an experienced employment lawyer at our law firm to discuss the specific facts of your case and understand your legal rights and options. This information does not create an attorney-client relationship.
What Legal Claims Are You Actually Waiving in a Severance Agreement?
When you sign a general release, you’re agreeing to give up an extensive list of potential legal claims. Most severance agreements contain broad language designed to cover every conceivable claim you might have against your employer.
The typical release covers all claims “known or unknown” through the date of signing. This includes discrimination claims under federal, state, and local laws—whether based on age, race, gender, disability, religion, national origin, sexual orientation, or any other protected characteristic. You’re also waiving harassment and hostile work environment claims, retaliation claims, and wrongful termination claims.
Beyond discrimination-related claims, releases typically include breach of contract claims (both express and implied), claims for unpaid wages or overtime (though some states limit this), bonus or commission disputes, stock option or equity disputes, and claims for emotional distress or defamation. The release often extends to claims under specific statutes like the Family and Medical Leave Act (FMLA), Fair Labor Standards Act (FLSA), Employee Retirement Income Security Act (ERISA), and Americans with Disabilities Act (ADA).
Many employees don’t realize that releases also commonly cover whistleblower claims under state law (though federal whistleblower protections may remain), claims for failure to accommodate disabilities or religious beliefs, privacy violations, negligent supervision or retention claims, and even promissory estoppel or detrimental reliance claims.
Which Claims Cannot Legally Be Waived?
Despite the broad language in most releases, federal and state laws protect certain rights that cannot be waived, no matter what the agreement says.
You cannot waive claims that arise after you sign the release. If your employer discriminates against you or fails to pay promised severance after you sign, those new claims remain actionable. Similarly, you cannot waive your right to file a charge with the Equal Employment Opportunity Commission (EEOC) or participate in EEOC investigations, though you typically waive the right to recover money from such charges.
Workers’ compensation claims for workplace injuries cannot be waived in a general release. Your rights to vested pension benefits under ERISA remain protected, as do unemployment compensation benefits. The National Labor Relations Board (NLRB) has also made clear that employees cannot waive their rights to engage in protected concerted activity or to file unfair labor practice charges.
Certain whistleblower protections under federal law, particularly those involving securities fraud (Sarbanes-Oxley) or False Claims Act (qui tam) actions, generally cannot be waived. Additionally, in many states, claims for unpaid wages that are undisputed and already earned cannot be released without specific procedures or approval from labor departments.
What's the Difference Between a General Release and a Limited Release?
Understanding whether you’re signing a general or limited release significantly impacts what rights you’re giving up.
A general release is the most comprehensive form, covering all possible claims against your employer up to the signing date. The language typically includes phrases like “any and all claims,” “known or unknown,” and “from the beginning of time.” These releases cast the widest possible net to protect employers from future litigation.
A limited release, by contrast, only covers specific types of claims or specific time periods. For example, a limited release might only cover claims related to your termination, leaving earlier discrimination or wage claims intact. Some limited releases exclude specific types of claims from the waiver, such as preserving pending EEOC charges or known wage disputes.
The scope matters enormously for your future options. With a general release, you’re essentially closing the door on any legal action related to your employment. A limited release might preserve important rights, particularly if you’ve already identified potential claims or have ongoing disputes with your employer.
How Do Releases Affect Potential Discrimination Claims?
Releases have particular significance for discrimination claims, which often represent the most valuable potential claims employees might have.
When you sign a release that includes discrimination claims, you’re waiving your right to pursue these claims in court or through administrative agencies (though you can still file EEOC charges; you waive monetary recovery). This includes not just obvious discrimination but also subtle patterns of bias you might only recognize later.
The timing of when you discover discrimination matters. If you already suspect discrimination before signing, you should carefully consider whether the severance offer adequately compensates you for giving up these claims. Once signed, arguing that you didn’t know about discrimination that already occurred becomes extremely difficult.
However, releases cannot protect employers from future discrimination. If your employer discriminates against you after you sign—for instance, by providing a negative reference based on your protected class or retaliating for protected activity—those new claims remain viable.
What Consideration Must You Receive for a Valid Release?
For a release to be legally binding, you must receive “consideration”—something of value beyond what you’re already entitled to receive.
Consideration cannot include benefits you’ve already earned. Your final paycheck, accrued vacation pay, vested stock options, or earned bonuses don’t count as consideration for a release because you’re already legally entitled to these amounts. The employer must provide something additional, which is why severance pay often serves as the consideration for releases.
The amount of consideration doesn’t need to match the value of the claims you’re releasing, but nominal amounts (like $100) might raise questions about whether the release was truly voluntary. Courts generally don’t evaluate whether consideration was “fair,” only whether something extra was provided.
In New York, consideration requirements align with general contract principles, but courts look closely at whether the employee genuinely received something of value beyond existing entitlements. This scrutiny increases when releases involve wage claims or when there’s evidence of coercion.
Can You Revoke Your Acceptance of a Severance Agreement?
Your ability to revoke a signed severance agreement depends primarily on your age and the agreement’s compliance with legal requirements.
For employees under 40, revocation rights typically don’t exist unless specifically provided in the agreement or under state law. Once you sign, you’re generally bound by the agreement unless you can prove fraud, duress, or other contract defenses.
The Older Workers Benefit Protection Act (OWBPA) provides significant protections for employees 40 and older. You have the right to revoke your acceptance within seven days after signing, regardless of what the agreement says. This seven-day period cannot be waived or shortened. The revocation must be in writing and delivered according to the agreement’s terms or, if not specified, to the person who provided the agreement.
The agreement doesn’t become effective or enforceable until the revocation period expires. If you revoke during this window, the entire agreement becomes void—you return the severance and regain your legal claims. Employers cannot require you to “pre-waive” your revocation rights or impose penalties for exercising them.
How Does the Older Workers Benefit Protection Act Affect Your Release?
The OWBPA establishes strict requirements for releases involving age discrimination claims for workers 40 and older.
You must receive at least 21 days to consider the agreement (45 days for group terminations). This time period starts when you receive the final, complete agreement—material changes restart the clock. While you can sign before the period expires, employers cannot pressure you to do so or withdraw the offer during this time.
The agreement must explicitly advise you in writing to consult with an attorney before signing. This isn’t just buried in fine print—it must be clear and conspicuous. The agreement must also specifically reference the Age Discrimination in Employment Act (ADEA) and clearly explain which rights you’re waiving.
For group terminations, additional disclosures are required. Employers must provide information about the “decisional unit” affected, eligibility factors for the program, time limits, job titles, and ages of all individuals eligible or selected for the program, and ages of all individuals not eligible or selected.
If an agreement fails to meet these requirements, the release of age discrimination claims is invalid, though other parts of the release might remain enforceable.
What Happens If You Discover New Claims After Signing?
Discovering potential claims after signing a release presents complex legal challenges.
For claims that existed before signing, even if unknown, the release typically bars them. Courts generally enforce “known or unknown” language, meaning you’ve waived claims you didn’t know about. This underscores the importance of thorough consideration before signing.
However, several exceptions might apply. If your employer fraudulently concealed information that would have revealed the claim, the release might be voidable. For instance, if your employer hid evidence of systematic discrimination or wage theft, courts might allow you to challenge the release.
Mutual mistake about fundamental facts might also invalidate a release. If both parties believed no wage violations existed, but a later Department of Labor investigation reveals systematic violations, the release might not bar those claims.
New claims arising from the severance negotiation process itself remain viable. If your employer discriminates during negotiations, fails to pay promised severance, or violates confidentiality provisions, these post-release claims aren’t barred.
How Broadly Can Release Language Be Written and Enforced?
The enforceability of broad release language varies significantly by jurisdiction and context.
Courts generally enforce broad releases when they’re clear and unambiguous. Language covering “any and all claims” or claims “known or unknown” typically captures everything not specifically prohibited by law. However, releases must still meet basic contract requirements—they must be voluntary, supported by consideration, and free from fraud or duress.
Overly broad or vague language might backfire. Some courts refuse to enforce releases that are so broad they’re incomprehensible to average employees. Releases attempting to waive non-waivable rights might be entirely invalidated rather than simply narrowed.
New York courts examine releases carefully when they involve sophisticated employers and individual employees. While broad releases are generally enforceable, courts look for evidence of overreaching, particularly when employees lack legal representation or when there’s a significant disparity in bargaining power.
Public policy limitations also restrict enforcement. Releases cannot prevent you from reporting crimes, cooperating with government investigations, or exercising fundamental rights. Provisions attempting to prevent EEOC charges or whistleblowing often invalidate entire release sections.
What Red Flags Should You Watch for in Release Language?
Certain provisions in releases should trigger careful scrutiny and potentially legal consultation.
Watch for attempts to waive non-waivable rights. Language purporting to prevent EEOC charges, workers’ compensation claims, or unemployment benefits signals either sloppy drafting or overreaching. These provisions might invalidate the entire release or indicate bad faith.
Extremely broad indemnification clauses requiring you to pay the employer’s legal fees if claims are brought deserve attention. While some fee-shifting might be appropriate, provisions making you liable for the employer’s defense costs, even for non-waived claims, are problematic.
Non-disparagement clauses that only restrict you, not the employer, create imbalanced obligations. Similarly, confidentiality provisions that prevent you from discussing discrimination or harassment might violate public policy, particularly under recent legislative changes.
Provisions requiring you to assist in litigation against other employees or to provide testimony favorable to the employer raise ethical and practical concerns. These cooperation clauses should be limited to truthful testimony and reasonable assistance.
Taking Action: Your Next Steps
Before signing any release of claims, take time to understand exactly what you’re giving up. The severance amount might seem attractive, but it’s buying your agreement to forfeit potentially valuable legal rights.
Review the entire agreement carefully, not just the release section. Consider whether you have any potential claims against your employer—discrimination, harassment, wage violations, or other issues. Calculate whether the severance adequately compensates you for releasing these claims.
If you’re 40 or older, use the full consideration period provided under the OWBPA. There’s no advantage to signing early, and the time allows for proper attorney consultation and negotiation.
Consider negotiating the release scope. While employers prefer broad releases, you might negotiate carve-outs for specific claims, mutual non-disparagement provisions, or better severance terms in exchange for the broad release.
Most importantly, get legal advice before signing. An experienced employment attorney can evaluate whether you have valuable claims, whether the severance is appropriate, and whether the release language is enforceable. The cost of consultation is minimal compared to the rights you’re potentially waiving.
At Nisar Law Group, we help employees understand and negotiate severance agreements every day. We can review your release provisions, identify potential claims, and negotiate better terms. Don’t sign away your rights without understanding their value. Contact us for a confidential consultation to protect your interests during this critical transition.
Frequently Asked Questions About Release Of Claims
A severance agreement release of claims is a legal contract where you agree to give up your right to sue your employer in exchange for severance benefits. Think of it as a trade-off: your employer provides money or benefits beyond what they already owe you, and you promise not to take legal action for anything that happened during your employment. This typically includes waiving rights to sue for discrimination, harassment, wrongful termination, unpaid wages, and other employment-related claims through the date you sign. The release usually contains broad language like “any and all claims, known or unknown” to protect the employer from future lawsuits. However, certain rights cannot be waived by law, including your right to file EEOC charges, collect unemployment benefits, or receive workers’ compensation for workplace injuries.
When a claim is “released,” you’re permanently giving up your legal right to pursue that claim in court or seek monetary damages for it. Once you sign the release and any revocation period expires, you cannot change your mind and sue for those issues later—even if you discover new information. For instance, if you release discrimination claims and later find evidence that you were paid less than colleagues because of your race, you cannot sue for that past discrimination. The release acts as a complete legal barrier to pursuing those claims. That’s why it’s crucial to understand what potential claims you might have before signing any release, as you’re essentially selling those rights to your employer for the severance package.
A general release of claims is the broadest type of waiver that covers virtually every possible legal claim against your employer from “the beginning of time” through the signing date. Unlike a limited release that might only cover specific issues or time periods, a general release attempts to wipe the slate clean entirely. It typically includes all federal, state, and local law claims—discrimination, harassment, wage and hour violations, breach of contract, emotional distress, and more. The language is intentionally expansive, often stating you’re releasing claims “whether known or unknown, suspected or unsuspected.” This means you’re giving up rights to claims you might not even realize you have. General releases are standard in most severance agreements because employers want maximum protection from future lawsuits.
While severance agreements vary, they typically contain four essential components that you need to understand. First, the compensation package details what you’ll receive—severance pay, continued benefits, unused PTO payout, and any other financial benefits. Second, the release of claims section (often the longest part) lists all the legal rights you’re waiving. Third, post-employment restrictions may include non-compete clauses, non-solicitation agreements, confidentiality requirements, and non-disparagement provisions that limit what you can do or say after leaving. Fourth, administrative provisions cover practical matters like the return of company property, cooperation with future investigations, references, and how the agreement will be enforced. Understanding each component helps you evaluate whether the overall package is fair and what obligations you’ll have after signing.
Severance payment structures vary significantly depending on your employer’s policies and what you negotiate. The most common method is a lump sum payment made within 30-60 days after the agreement becomes effective (after any revocation period expires). Some employers prefer salary continuation, where you remain on payroll and receive regular paychecks for the severance period—this can help with health insurance continuation and unemployment benefit timing. Others offer installment payments spread over several months or linked to compliance with non-compete agreements. The payment method affects your taxes (lump sums often mean higher withholding), unemployment benefit eligibility (salary continuation might delay benefits), and financial planning. Always confirm whether the stated amount is gross or net, what will be withheld, and exactly when you’ll receive the money.
Several factors can delay severance payments beyond what you might expect. Most commonly, if you’re over 40, the Older Workers Benefit Protection Act requires a 7-day revocation period after signing—your severance cannot be paid until day 8 at the earliest. Many companies then add their own processing time, often 2-4 weeks for payroll setup and approvals. If your agreement requires you to sign additional documents, return company property, or complete knowledge transfer, payment might be contingent on fulfilling these obligations. Some employers deliberately structure payments 60+ days out to avoid certain tax withholding requirements. Administrative delays, especially during layoffs affecting many employees, can add weeks. If your severance is significantly delayed beyond the agreement’s terms, document all communications and consider whether the employer is breaching the agreement.
Yes, you can and often should negotiate your severance agreement—nothing is final until you sign. Despite what HR might imply, initial severance offers are rarely “non-negotiable.” You can negotiate not just the money, but also the scope of the release, non-compete restrictions, reference terms, and benefit continuation. Your leverage depends on several factors: potential legal claims you might have (discrimination, retaliation, wage violations), your knowledge of company operations, the circumstances of your departure, and how much the company wants a clean, quiet exit. Even without obvious legal claims, employers often have room to improve offers, especially if you’re a long-term employee or have specialized knowledge. The key is approaching negotiation professionally and understanding what you’re giving up. Consider consulting an employment attorney who can evaluate your leverage and help maximize your package.
If you refuse to sign a severance agreement, you keep all your legal rights but forfeit the severance benefits. You remain free to pursue any legal claims against your employer—discrimination, wrongful termination, unpaid wages, or other violations. You’re not obligated to sign anything beyond what’s needed to receive your final paycheck and already-earned benefits like accrued vacation. However, you won’t receive the additional severance pay, extended health coverage, or other benefits offered in exchange for the release. Some employers might return with an improved offer if they’re concerned about potential litigation. Others might withdraw the offer entirely. Before refusing, carefully weigh the severance value against your claims’ potential worth and litigation costs. Remember that lawsuits can take years, cost thousands in legal fees, and success isn’t guaranteed. An employment attorney can help evaluate whether refusing the agreement makes financial and strategic sense for your situation.
Have questions about restrictive covenants in your severance agreement? These terms are negotiable, and understanding your leverage can mean the difference between career restrictions and career freedom. Contact Nisar Law Group for a confidential consultation about protecting your professional future while securing the best possible severance package.
