## Severance agreements in Massachusetts When you leave a job — voluntarily or involuntarily — your employer may offer a **severance agreement**. The deal: payment + benefits in exchange for releasing claims and (usually) confidentiality. Massachusetts severance agreements are negotiable contracts. ## Common provisions **1. Severance pay.** Cash payment, often calculated as: - Weeks per year of service (e.g., 1-2 weeks/year) - Lump sum or installments - Tied to non-compete duration **2. Continuation of benefits:** - Health insurance (COBRA subsidies) - Bonus / commission true-up - Vesting acceleration - Outplacement services **3. Release of claims.** Employee waives claims against employer: - Discrimination / harassment / retaliation - Wage / hour claims - Wrongful termination - Defamation - Breach of contract - Some claims CAN'T be waived (workers' comp, unemployment, future claims) **4. Confidentiality.** Don't disclose: - Severance amount - Reasons for separation - Internal company information - Now restricted by Speak Out Act (2022) for harassment / sexual assault claims **5. Non-disparagement.** Mutual or one-way. **6. Non-compete / non-solicit.** Restrictions on future employment / customer contact. **7. Cooperation clauses.** Assist with future investigations / litigation. **8. Return of property.** Devices, documents, ID badges. **9. Reference policy.** What employer will say to future employers. **10. Tax allocation.** How payment is structured (W-2 vs 1099 etc.). ## Federal protections — OWBPA **Older Workers Benefit Protection Act (OWBPA, 1990)** applies when employee is 40 or older: - **21 days to consider** the agreement - **7 days to revoke** AFTER signing - **45-day consideration** for group layoffs (2+ employees over 40) - **Written agreement** must specifically waive ADEA claims - **Advised to consult attorney** - **Consideration** beyond what employee was already entitled to - **Disclosure** of employees terminated / retained in group layoffs (job titles + ages) Releases that don't satisfy OWBPA do NOT waive age-discrimination claims. ## What can't be waived Even with valid release: - **Workers' comp claims** - **Unemployment benefits** - **Future claims** (claims arising after the agreement) - **Vested ERISA benefits** - **NLRB charges** (concerted activity) - **Right to file with EEOC / state agencies** (though employee may waive monetary recovery) - **Whistleblower claims** under SEC, IRS, FCA (varies) - **Future sexual harassment claims** (post-Speak Out Act) ## Negotiation strategies Almost everything is negotiable: **More money:** - Higher severance (especially if you have leverage) - Bonus / commission true-up - Stock vesting acceleration - Reimbursement of unused PTO **Better terms:** - Longer COBRA coverage - Outplacement services - Mutual non-disparagement - Neutral reference language (specific job title + dates only) - Confidential settlement filed under seal - Soft non-compete - Right to public disclose certain claims **More time:** - 21 days minimum (OWBPA) for 40+ - Often negotiate up to 45+ days - More time to explore other claims ## When you have leverage - **Pending claims** (EEOC charge, complaints filed) - **Documented misconduct** by employer - **Long tenure** - **Mass layoff** (WARN Act notice issues) - **Executive role** - **Group of similarly-situated employees** - **Pending whistleblower / SEC complaint** ## When you have less leverage - **At-will firing for documented performance issues** - **Short tenure** - **No discrimination claims** - **Already received generous package** - **Confidentiality essential to employer** ## Tax considerations - **Severance is W-2 wages** — taxed as ordinary income, withholding applies - **Section 409A** governs deferred compensation; mistakes can trigger 20% penalty - **Lump sum vs payments** — affects tax bracket year - **"Cliffs" of severance** — try to negotiate timing ## Common mistakes - **Signing too quickly** without legal review - **Not asking for more** — employer's first offer is usually negotiable - **Waiving valuable claims** without understanding value - **Missing the OWBPA 7-day revocation window** - **Accepting ambiguous reference language** - **Forgetting unused vacation / PTO** - **Not understanding non-compete restrictions** ## Recent legal trends **Speak Out Act (2022)** — bans pre-dispute NDAs covering sexual harassment / assault. POST-DISPUTE NDAs in severance are still allowed but employee can choose to disclose. **Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (2022)** — gives whistleblowers right to invalidate pre-dispute arbitration clauses. **State NDAs in employment harassment** — many states (CA, NY, NJ, IL, WA) restrict NDAs covering harassment / discrimination. **Non-compete reform** — many states have restricted non-competes; FTC ban (struck down 2024 but still pending). ## What you should do Don't sign a severance agreement without legal review. Most Massachusetts employment attorneys offer flat-fee severance review ($300-$1,500). The investment usually pays for itself many times over through better terms. If you have potential claims (discrimination, harassment, retaliation, whistleblower), severance review is even more critical. --- *This guide is general information about federal and Massachusetts employment law as of early 2026 and is not legal advice. Severance agreements are complex contracts. Talk to a licensed Massachusetts employment attorney about your specific situation.*