Should you sign your severance agreement immediately?

If your company handed you a severance agreement on the day of the layoff and asked you to sign it the same day or by the end of the week, the right answer is almost always no — at least not yet. Federal law and basic professional norms both give you more time than that, and the urgency the company is signalling is a tactic, not a deadline.

A severance agreement is a contract. You are exchanging a number of things — usually your right to sue the company, sometimes a non-compete, sometimes a non-disparagement clause — for a payment. The exchange is fine. The exchange happening before you have read the contract is not.

Here is what you actually need to know before you sign anything.

What does federal law actually require?

Under the Older Workers Benefit Protection Act (OWBPA), if you are 40 or older and the agreement asks you to waive any claims under federal age discrimination law, the employer must give you:

• At least 21 days to consider the agreement (individual layoffs)
• At least 45 days to consider the agreement (group layoffs of two or more people)
• At least 7 days after signing to revoke your acceptance

If you are under 40, federal law does not impose these timelines on your specific agreement, but most companies use the 21-day window as their default anyway because their lawyers wrote one template for everyone.

This is the most important fact: the 21 days are yours. The agreement may say so in the fine print, or it may not — but if you are over 40 and the agreement asks you to release federal age discrimination claims, the timeline is required by law regardless of what your manager said in the room.

Why is the company pushing me to sign quickly?

Several reasons, and none of them are reasons that help you.

• Faster signing reduces the chance you talk to a lawyer. A signed agreement is a closed file. An open file is a risk to the company.
• Faster signing reduces the chance you talk to other laid-off colleagues. Group layoffs are where shared information and bargaining position start to compound.
• Faster signing reduces the chance you find something material in the document — a non-compete you forgot about, a clawback clause, a release of claims that is broader than you expected.
• Faster signing closes the headcount line on their books. This is administrative, not malicious — but the urgency you feel is the company’s urgency, not yours.

The 48-hour pause is professional, not adversarial. Hiring managers and HR partners deal with this all the time. The most common response to “I need a few days to read this carefully” is “of course.”

What should I actually look for in the document?

Read it once for content, once with a pen. Look for these specifically.

• Severance amount and payment schedule. Lump sum or salary continuation? Are taxes withheld at supplemental rates? When does the first payment hit?
• Release of claims. This is the clause that waives your right to sue. Look at how broadly it is written. “All claims known and unknown” is common. Specific exclusions — for unemployment benefits, for vested equity, for workers’ comp, for whistleblower protections — should be listed.
• Non-compete or non-solicitation language. Is there a non-compete? How long is it? Which industries or companies does it cover? Are they paying you for it? (In many states, an unpaid non-compete is unenforceable after a lay off.) Non-solicitation usually applies to clients and to employees.
• Non-disparagement and confidentiality. Many agreements require you not to speak negatively about the company. Some are mutual, most are one-way. If one-way, ask for it to be mutual.
• Cooperation clause. Some agreements require you to “cooperate” with future legal matters. The language should be specific and time-limited.
• Equity treatment. What happens to your unvested options or RSUs? Is there an acceleration clause? Are you required to exercise vested options within 90 days, or has the window been extended?
• Benefits and COBRA. Some agreements include subsidised COBRA for a period. This can be worth thousands of dollars.
• References policy. Does the company commit to providing a neutral reference? Will they confirm dates of employment only, or speak to performance?
• Final paycheck details. PTO payout, accrued bonus, expense reimbursement. These should be paid regardless of whether you sign — confirm they are listed separately.
• Tax characterisation. Severance is taxed as supplemental income at a federal withholding rate of 22% (or 37% for amounts over $1 million in a year). State tax also applies.

When is a lawyer worth the cost?

For most modest severance packages — say, four to twelve weeks of pay with a standard release — a careful read and a Google session is enough. For anything else, a lawyer is worth it.

Specific situations where you should call an employment lawyer before signing:

• The package is worth more than three months of your salary
• You have significant unvested equity at stake
• The non-compete is broad or long (more than six months)
• You suspect the lay off was related to age, race, gender, disability, pregnancy, or retaliation for protected activity
• You were part of a group layoff and want to coordinate with colleagues
• The release language is unusually broad or includes terms you don’t recognise
• The company is asking you to waive benefits or claims that are not negotiable in your state
• You were promised something verbally (a bonus, an extension, an exception) that is not in the document

Many employment lawyers offer free initial consultations or flat-fee reviews for $300–$800. The cost of missing one clause in a severance worth tens of thousands of dollars is almost always larger.

CareerCanopy is built for the stretch after this — when the paperwork is signed, the runway is set, and the search begins. The legal review is a one-time gate. The search is the long part.

What about the 7-day revocation window?

If your agreement falls under OWBPA (age 40+, federal age discrimination release), you have 7 days after signing to revoke your acceptance. This is automatic. You do not need to give a reason. You usually need to revoke in writing, to the address specified in the agreement, before the 7 days are up.

Treat the revocation window as a safety net, not a strategy. The right time to make the decision is before signing, not after.

A short, ordered checklist before signing

1. Confirm the deadline in writing (21 or 45 days minimum if you are 40+, otherwise whatever the contract says).
2. Read the agreement twice — once for content, once with a pen.
3. List every clause you do not understand.
4. Decide whether a lawyer’s review is worth it (almost always yes for anything large).
5. If you want to negotiate, do it now — not after you sign.
6. Confirm what you receive regardless of signing (earned pay, unused PTO, COBRA notice).
7. Sign, scan, and keep a copy.
8. Note the 7-day revocation window if it applies.

The one phrase that almost always works

If you need a polite way to buy time without sounding adversarial, this works in nearly every case:

“Thank you for the package. I want to give it the careful read it deserves and have a brief conversation with my attorney. I’ll be back to you with any questions or a signed copy by [date 7–14 days out].”

That sentence is professional, normal, and exactly what the HR team is expecting you to say. Anyone who pushes back on it is telling you something useful about the company you have left.