Release of Claims

The legal waiver in a severance agreement where you give up your right to sue your former employer — the most important thing to understand before signing any severance document.

A release of claims is a legal agreement in which one party (usually a departing employee) waives their right to bring legal claims against another party (the employer) in exchange for consideration — typically severance pay. It's the core of almost every severance agreement and is the reason employers offer severance at all: they're buying legal peace. The release typically covers 'any and all claims' arising from the employment relationship up to the date of signing — discrimination claims, wage and hour claims, breach of contract claims, and any other cause of action the employee might have. Once signed and the revocation period expires, the claims are extinguished. You cannot sue for something you've released, even if you later discover strong evidence of wrongdoing.

The ADEA (Age Discrimination in Employment Act) imposes specific requirements on releases signed by employees aged 40 and over, under the Older Workers Benefit Protection Act (OWBPA). For these employees, the release must: (1) explicitly reference ADEA claims, (2) provide at least 21 days to consider the agreement (45 days if part of a group layoff), (3) allow 7 days after signing to revoke the agreement, (4) be written in plain language, and (5) advise the employee in writing to consult an attorney. Releases that fail to meet these requirements are not enforceable as to ADEA claims — a significant gap if age discrimination was a factor in the termination. For employees under 40, there's no federal mandated review period, though some states provide additional protections.

The leverage employees have in release negotiations is often underestimated. If an employer has legal exposure — potential discrimination claims, wage and hour violations, questionable termination circumstances — the release is worth more to them, and that value can be used to negotiate better severance terms. Employees who have potential claims should never sign a release without at minimum consulting an employment attorney. Even employees who don't believe they have strong claims may have undiscovered ones — a conversation with an attorney before signing costs very little compared to the value of understanding what you're waiving. The release is the only leverage you have; once signed, it's gone.

What Releases Typically Cover — and What They Don't

  • Typically released: discrimination claims (Title VII, ADA, ADEA), wrongful termination, breach of contract, breach of implied covenant, wage and hour claims, harassment claims, retaliation claims, all state equivalents.
  • Cannot be released: EEOC's right to investigate and bring its own charges (even if you release your own claim, you can still file a charge that triggers an EEOC investigation), future claims (claims arising after the release date), workers' compensation claims in many states, NLRA rights to engage in collective activity, ERISA vested pension benefits.
  • ADEA-specific requirements for employees 40+: must explicitly reference ADEA, 21-day review period, 7-day revocation window. A release that doesn't meet these requirements is unenforceable for ADEA claims.
  • Mutual release: many releases are one-sided (only the employee releases claims). Negotiating for a mutual release — where the employer also releases claims against you — is worth requesting, particularly if you have concerns about IP disputes or contract claims.
  • Non-disparagement: frequently paired with a release — you agree not to make negative statements about the company. Try to negotiate for mutual non-disparagement and carve-outs for truthful statements in legal proceedings.
  • Review period: even if you're under 40, request at least two weeks to review any severance agreement. Most employers will grant this — if they refuse, that itself is a signal worth noting.

Before You Sign: What to Do

The most important thing to do before signing a release is to consult an employment attorney — even briefly. Many employment attorneys offer free 30-minute consultations, and the question 'do I have any claims worth holding onto?' is usually answerable in that time frame. If you have potential claims, the attorney can tell you what they might be worth and whether negotiating better severance in exchange for the release makes sense. If you don't, you sign with confidence rather than fear. Either way, you're informed. Read the release carefully, paying particular attention to the scope of claims covered, the consideration (is the severance actually contingent on signing, or are you getting something you'd have received anyway?), any non-disparagement obligations, and any confidentiality requirements. Never sign under time pressure imposed by the employer — if they tell you it expires tomorrow, ask for an extension. Most will grant one.

Example

A 52-year-old manager is laid off in a restructuring along with 12 others. She receives a severance agreement offering 8 weeks of pay. Under OWBPA, she has 45 days to review the agreement (because it's a group layoff), and 7 days to revoke after signing. She consults an employment attorney, who notes that 9 of the 13 people laid off were over 45, while most of the retained team is under 35 — a pattern that warrants attention. The attorney sends a letter noting the potential ADEA concern. The employer increases the severance to 20 weeks before she signs. The OWBPA review period is what gave her time to identify the issue.