You were fired, and the same HR representative who handed you the termination letter also handed you a severance agreement. The document offers some number of weeks of pay, maybe continuation of health benefits for a period, and in exchange asks you to sign a general release of all claims against the company. There’s a deadline to sign, usually 21 days, sometimes less. The pressure to take the money is enormous, because rent is due and the job search hasn’t started yet. But signing that agreement without understanding what you’re giving up could be the most expensive mistake of your life. Wrongful termination lawyers in Dallas review severance agreements for terminated employees every week, and in a significant number of cases, the value of the legal claims the employee is being asked to waive far exceeds the severance being offered.
The agreement isn’t a gift. It’s a transaction, and the employer drafted it entirely in its own favor.
What the General Release Actually Waives
The core of almost every severance agreement is the general release of claims. This provision typically states that the employee releases the employer from any and all claims, known or unknown, arising out of the employment relationship or the termination, including claims under Title VII, the ADA, the ADEA, the FMLA, the FLSA, the Texas Labor Code, and any other federal, state, or local law.
That language is intentionally comprehensive. If you sign it, you are waiving your right to file a discrimination claim, a retaliation claim, a wage claim, a workers’ comp retaliation claim under Section 451.001, a Sabine Pilot claim, a breach of contract claim, and essentially every other legal theory that might apply to your termination. You are waiving claims you know about and claims you haven’t yet discovered. You are waiving the right to file a charge with the EEOC or the Texas Workforce Commission, or if the agreement permits the filing of an agency charge (some do, to avoid issues with EEOC cooperation rights), you are waiving the right to recover any monetary relief through that process.
The release is the entire point of the severance agreement from the employer’s perspective. The employer is paying you a defined amount of money to eliminate the risk of a lawsuit that could cost far more. If your wrongful termination claim is strong, the employer knows it, and the severance offer reflects the employer’s assessment of how much it needs to pay to make the risk go away.
The OWBPA Requirements for Employees Over 40
If you are 40 years of age or older, the Older Workers Benefit Protection Act imposes specific requirements on the severance agreement that the employer must satisfy for the release of your age discrimination claims to be valid. These requirements exist because Congress recognized that older workers are particularly vulnerable to coerced waivers during termination, and they provide protections that apply regardless of whether age discrimination was involved in the termination.
The agreement must specifically reference the ADEA and advise the employee that they are waiving claims under it. The employer must advise the employee in writing to consult with an attorney before signing. The employee must be given at least 21 days to consider the agreement (or 45 days if the termination is part of a group layoff or reduction in force). The employee must have 7 days after signing to revoke the agreement. The agreement must be written in a manner that is understandable to the average eligible employee.
If the employer fails to comply with any of these requirements, the ADEA waiver may be unenforceable. The employee can potentially sign the agreement, accept the severance pay, and still pursue an age discrimination claim, because the waiver of that specific claim was never valid. This is one of the most significant leverage points in severance negotiations involving employees over 40, and employers who rush the process or skip the required advisements create vulnerabilities they may not recognize until the lawsuit is filed.
For group terminations, the OWBPA requirements are even more detailed. The employer must provide a list of the job titles and ages of all employees selected for the layoff, as well as the job titles and ages of employees in the same job classification or organizational unit who were not selected. This disclosure requirement exists so that older employees can evaluate whether the selection process had a disparate impact on workers over 40. If the employer didn’t provide this information, the ADEA release may be invalid for every employee in the group.
Why Wrongful Termination Lawyers in Dallas Review Severance Agreements Before Signing
The attorney’s role in a severance review is threefold: evaluate the strength of the legal claims the employee is being asked to waive, assess whether the severance amount is adequate relative to those claims, and identify any provisions in the agreement that create additional risks for the employee beyond the release itself.
The claims evaluation is the foundation. An attorney who determines that the employee has a strong retaliation claim worth six figures in potential damages will view a $15,000 severance offer very differently than one who determines the employee’s claims are weak or time-barred. The strength of the claims is the leverage that determines whether the employee should sign as offered, negotiate for more, or reject the agreement and pursue litigation.
The adequacy assessment considers the severance amount in relation to the employee’s salary, the strength of the claims, the likely duration of unemployment, the cost and risk of litigation, and the employee’s financial circumstances. There is no formula. A severance offer of four weeks’ pay for a senior executive with a strong age discrimination claim is inadequate. The same offer for an entry-level employee with a marginal claim may be reasonable. The analysis is case-specific.
Provisions Beyond the Release That Matter
Severance agreements routinely include provisions that extend beyond the release of claims, and some of these provisions create ongoing obligations that can affect the employee’s career and legal position long after the severance check clears.
Non-disparagement clauses prohibit the employee from making negative statements about the employer, its management, its products, or its business practices. These clauses are typically one-sided: the employee is prohibited from disparaging the employer, but the employer makes no reciprocal commitment. An employee who signs a non-disparagement clause and later tells a prospective employer the truth about why they were fired, or posts about their experience on social media, could be accused of breaching the agreement. Negotiating for mutual non-disparagement, or at minimum carving out exceptions for truthful statements in legal proceedings and government investigations, is standard practice in severance negotiations.
Non-compete and non-solicitation clauses sometimes appear in severance agreements even if the employee didn’t have a non-compete in their original employment agreement. The employer uses the severance payment as the consideration that supports the new restrictive covenant. An employee who signs without recognizing the non-compete provision may discover that the severance payment they accepted in exchange for releasing their claims also restricts their ability to work in their field for a year or more. Under Texas Business and Commerce Code § 15.50, the enforceability of these covenants depends on their reasonableness in scope, geography, and duration, but the employee is in a far better position to challenge or negotiate these terms before signing than after.
Cooperation clauses require the employee to cooperate with the employer in pending or future litigation, investigations, or audits. While cooperation clauses are not inherently unreasonable, they can become burdensome if they require the employee to make themselves available at the employer’s convenience, travel at the employer’s direction, or prepare for and participate in proceedings that consume significant time. Negotiating for reasonable limitations on the cooperation obligation, including reimbursement for time and expenses, protects the employee from open-ended commitments.
Confidentiality provisions prohibit the employee from disclosing the terms of the severance agreement itself. This prevents the employee from telling coworkers how much they received, which serves the employer’s interest in keeping severance amounts opaque and preventing other terminated employees from using the information as a benchmark. Some confidentiality provisions are drafted broadly enough to prohibit the employee from even disclosing the existence of the agreement, which can create awkward situations when the employee needs to explain their departure to prospective employers or references.
Negotiation Is Almost Always Possible
Most employees assume the severance agreement is a take-it-or-leave-it proposition. It rarely is. The employer presented the agreement because it wants the release. It wants legal certainty that the employee won’t file a claim. That desire for certainty is the employee’s leverage, and an attorney who can articulate the specific claims the employee would pursue if the agreement isn’t signed is in a strong position to negotiate better terms.
The negotiation can address the severance amount, the scope of the release, the non-compete and non-disparagement provisions, the cooperation obligations, the confidentiality terms, and the characterization of the departure for reference purposes. Not every provision is negotiable in every case. But in cases where the employee has strong underlying claims, the employer’s incentive to secure the release creates room for meaningful improvement in the agreement’s terms.
The 21-day consideration period (or 45 days for group terminations) exists for a reason. It’s there so you can have the agreement reviewed by an attorney before you sign it. Using that time is not a sign of bad faith. It’s exactly what the law contemplates.
Don’t Sign Away a Case You Don’t Know You Have
A severance agreement is the employer’s attempt to buy closure at a price it chose. Whether that price is fair depends entirely on what you’re giving up, and you can’t evaluate what you’re giving up without understanding the legal claims available to you. If you’ve been terminated in Dallas and presented with a severance agreement, wrongful termination lawyers in Dallas can review the agreement, assess the claims you’d be waiving, and advise you on whether to sign, negotiate, or walk away. The Mundaca Law Firm reviews severance agreements for employees throughout Dallas-Fort Worth and can provide the evaluation you need within the time constraints the agreement imposes. Contact the firm as soon as you receive the agreement. The consideration period is a deadline, and every day you wait is a day less for your attorney to work with.
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