A severance check can look straightforward, especially after a Q4 layoff. But the payment is almost always the exchange for something far broader: a release of claims, restrictions on what an executive can say or do after departure, and decisions that touch equity, bonuses, benefits, and professional reputation. Sign too quickly, and the rights being released may be worth far more than the check.
For executives deciding what to look for in a severance agreement after a layoff, the first task is to view the document as a complete transition package, not a single number. Cadogan Law represents Florida executives, professionals, and employers in severance matters, and Gina Cadogan’s experience on both sides of employment disputes informs a practical review of the agreement’s language and the leverage behind it.
Start With the Deadline & the Documents
Before evaluating the offer, identify exactly when the agreement must be signed, whether that deadline is negotiable, and whether the employer has described the separation as an individual termination or part of a larger reduction in force. A short deadline doesn’t mean an executive must sign immediately. It does mean the review should begin promptly.
Executives age 40 or older should pay close attention to any waiver of rights under the Age Discrimination in Employment Act, the federal law that prohibits age-based employment discrimination. The Older Workers Benefit Protection Act (OWBPA) sets requirements for a knowing and voluntary waiver of age discrimination claims. In qualifying individual agreements, the employee must generally receive at least 21 days to consider the offer. In a group termination program, that window extends to 45 days, followed in either case by a seven-day revocation period after signing.
Those federal timing rules don’t create a general entitlement to severance pay. Under Florida law, employers generally aren’t required to provide severance unless an employment agreement, policy, plan, or other obligation requires it. Still, a proposed payment may be open to negotiation when the agreement asks the executive to give up valuable rights or when the employer’s stated terms don’t align with existing documents.
Gather these records before reviewing the offer:
- Employment Documents: The employment agreement, offer letter, amendments, compensation letters, and change-in-control provisions.
- Compensation Materials: Bonus plans, commission plans, deferred compensation documents, equity award agreements, and vesting schedules.
- Benefits Information: Health insurance materials, retirement plan information, unused leave policies, and reimbursement records.
- Employment Records: Performance reviews, compensation statements, relevant emails, written complaints, leave records, and layoff communications.
Calculate the Offer’s Total Value
The answer to what to look for in a severance agreement after a layoff isn’t found in the severance amount alone. A package might offer several months of salary continuation while leaving unresolved an annual bonus, commissions earned before termination, restricted stock units, stock options, or health insurance premiums. Each item can have a different source, condition, payment date, and tax consequence.
Separate Severance From Amounts Already Owed
Severance is compensation offered in exchange for signing the agreement. Earned wages, approved expense reimbursements, and certain commissions may be governed by separate obligations entirely. Accrued vacation or paid time off depends on the employer’s written policy or contract, so the agreement should be compared against that policy language rather than assuming unused time is folded into the severance figure.
Review Bonus, Commission, & Incentive Terms
Bonus and incentive compensation often turns on active employment as of a payment date, a board or management determination, individual performance conditions, or company results. The agreement should be compared against the underlying plan to determine whether a bonus was already earned, remains discretionary, or is forfeited on separation. Sales leaders and revenue-based executives should also examine whether commission calculations account for transactions closed, invoiced, or collected after departure.
Account for Equity & Benefits
Equity compensation deserves its own review. Restricted stock units are share awards that typically vest over time; stock options generally provide the right to buy shares at a set price during a defined exercise window. A layoff can affect unvested awards, accelerate vesting under some plans, or trigger a short deadline to exercise vested options. Missing that deadline can mean leaving real money behind.
Health coverage, life insurance, disability benefits, and retirement contributions can also shift the real value of the offer. The agreement should state whether the company will subsidize continuation coverage, how long that support lasts, and whether any repayment obligation applies if the executive finds new employment. Payment timing matters as well, particularly where a lump sum, salary continuation, or delayed payment may affect cash flow and withholding.
Read the Release & the Restrictions
A release of claims is the provision through which an employee agrees not to pursue certain legal claims against the employer and other covered parties. It’s often the central consideration the company receives for severance pay. An executive should identify which entities, officers, affiliates, benefit plans, and individuals are covered, as well as the time period and categories of claims included. Not every right can be waived, and the document may preserve the ability to report possible violations to government agencies or participate in an investigation while still limiting personal recovery in certain circumstances.
Confidentiality provisions may cover business information, the agreement itself, or both. A non-disparagement clause restricts negative statements about the company or its leaders and should be assessed for mutuality, exceptions, duration, and practical effect on future interviews or public communications. Executives may also want clarity about separation announcements, title descriptions, internal messaging, and whether the employer will provide a neutral reference.
Restrictive covenants limit conduct after employment ends. They may restrict contacting customers, recruiting former colleagues, using confidential information, or working for certain competitors. A severance agreement may restate existing restrictions, expand them, or require an executive to reaffirm separate noncompete or nonsolicitation obligations. How much those provisions matter depends on the executive’s next career move, industry relationships, and the wording of earlier agreements.
Clawback and repayment provisions also require close attention. The agreement may require repayment of severance if the executive breaches confidentiality obligations, violates restrictive covenants, accepts certain payments, or challenges the agreement. The trigger, amount, and procedure should be clearly understood before signing.
Identify Executive-Specific Leverage
Executives often have compensation structures that don’t fit a standard weeks-of-pay formula. A meaningful severance review compares the proposed package against employment agreements, incentive plans, equity documents, and change-in-control protections. A company may have used a form agreement for the layoff, but the executive’s contractual rights are often far more individualized.
Negotiation issues can arise when the separation appears inconsistent with promised termination protections, compensation formulas, vesting terms, performance records, protected leave, complaints, or other facts surrounding the decision. That doesn’t mean every layoff creates a legal claim or produces the same leverage. It does mean the agreement should be evaluated against the full employment relationship before valuable rights are released.
Terms that may matter beyond additional cash:
- Equity Treatment: Extended option exercise periods, continued vesting, or clarification of treatment for unvested awards.
- Bonus Treatment: Prorated annual bonuses, commission calculations, or payment of incentives tied to work already completed.
- Benefits Support: Employer-paid continuation coverage or a defined contribution toward premiums.
- Career Protection: Narrower restrictive covenants, agreed announcement language, a neutral reference, or title clarification.
- Transition Assistance: Outplacement support, continued access to professional contacts, or a reasonable cooperation obligation.
Decide Whether to Sign, Negotiate, or Wait
The practical question is whether the payment fairly accounts for the rights being released and the obligations that continue after employment ends. An offer may be appropriate to accept when its economic terms, release language, and restrictions align with the executive’s existing agreements and transition plans. It may warrant negotiation when compensation is incomplete, equity treatment is unclear, restrictions are broader than expected, or the release reaches potential claims that haven’t been fully assessed.
Before making that decision, preserve relevant records lawfully. Keep copies of personal employment documents and communications already available to the executive, but don’t take confidential company information, delete records, or make public statements before understanding the agreement and existing obligations. That restraint protects both the executive’s options and professional standing.
A confidential legal review is particularly valuable when a package involves substantial compensation, bonus or incentive pay, equity awards, restrictive covenants, or a possible employment-related claim. The severance agreement may be the final document in a long employment relationship, but its terms can shape the next role, the next compensation package, and the executive’s ability to move forward on their own terms.
Cadogan Law reviews and negotiates severance agreements for executives and professionals in Fort Lauderdale, Miami, Palm Beach, and across Florida. To discuss a proposed agreement before the deadline, contact Cadogan Law at (954) 371-1607.