What Should You Never Agree to in a Severance Agreement?

Losing a job is never easy. Whether it was expected or came out of the blue, getting let go can leave you scrambling — financially, emotionally, and legally. And then comes the paperwork.

One document in particular often causes confusion and stress: the severance agreement.

If your employer offers you a severance package, you might feel pressure to sign it quickly. Maybe there’s a lump sum of cash involved. Maybe they say it’s “standard.” But before you put pen to paper, it’s important to understand what you’re actually agreeing to — and what you should never agree to, no matter how tempting the offer seems.

In New Jersey, there are laws that protect you during this process, but that doesn’t mean every severance agreement is fair. Some include clauses that can seriously limit your rights, especially if you sign without fully understanding the consequences.

Let’s break it down: what severance agreements are, what to watch out for, and what you should never agree to — especially in the Garden State.

First, What Is a Severance Agreement?

A severance agreement is a contract between you and your employer that outlines the terms of your departure. In exchange for a sum of money or other benefits (like extended health insurance or job placement assistance), you're typically asked to give up certain rights.

Common things severance agreements cover:

• The amount and timing of severance pay
• Whether unused vacation or PTO will be paid out
• Health insurance continuation (COBRA)
• A release of claims (waiving your right to sue)
• Confidentiality clauses
• Non-compete terms

Some of these are routine. Others? Not so much.

Let’s take a closer look at what you should never agree to — especially without first talking to an attorney.

1. A Full Waiver of Legal Claims Without Understanding What You're Giving Up

One of the biggest red flags in a severance agreement is a broad release of claims. This is language that says, in exchange for your severance pay, you agree not to sue your employer for anything that happened during your time there.

That might include:

• Wrongful termination
• Discrimination (based on race, gender, disability, etc.)
• Sexual harassment
• Wage and hour violations
• Retaliation for whistleblowing
• Family and Medical Leave Act (FMLA) violations

If you sign this kind of clause, you may be giving up your ability to take legal action — even if you didn’t know you had a case.

New Jersey employees are protected under laws like the New Jersey Law Against Discrimination (NJLAD), CEPA (Conscientious Employee Protection Act), and wage and hour statutes. If you’ve been mistreated at work, signing away your rights could prevent you from seeking justice later.

2. Overly Restrictive Non-Compete Agreements

Some severance agreements contain non-compete clauses that restrict your ability to work in your field for months — or even years — after you leave.

In New Jersey, non-compete clauses must be reasonable to be enforceable. They can’t prevent you from making a living, especially if the restriction is too broad in time, geography, or scope.

But many employers include overreaching non-compete language anyway, hoping you’ll sign without thinking twice.

Before you agree, ask yourself:

• How will this affect my job search?
• Will I be locked out of my industry or forced to move to stay employed?
• Is the language specific — or is it vague and open-ended?

Don’t sign away your future career just to get a few extra weeks of pay. Always ask a lawyer to review severance agreements that include non-competes.

3. Gag Orders or Broad Confidentiality Clauses

It’s normal for employers to want discretion in business matters. But some take it too far.

If a severance agreement includes a confidentiality clause that says you can’t talk about the agreement, your time at the company, or why you were let go — be careful. Especially if it prohibits you from reporting illegal or unethical behavior.

Even worse: some agreements prohibit you from speaking to government agencies like the EEOC or NJ Division on Civil Rights. 

Under New Jersey law, you still have the right to:

• Report discrimination or harassment
• File a wage complaint
• Cooperate in investigations
• Speak to an attorney

If the confidentiality clause goes too far, it’s a red flag. Ask for it to be narrowed or removed.

4. Agreeing Not to Sue for Things That Haven’t Happened Yet

Some severance agreements sneak in language asking you to waive rights for future events — things that haven’t even happened yet. This is a hard no.

You can’t (and shouldn’t) give up your right to challenge future mistreatment or violations that occur after you sign.

If the language in the agreement seems too broad or confusing, it’s worth asking a severance agreement lawyer in New Jersey for a second opinion.

5. Unpaid Wages or Benefits Being Used as Leverage

Sometimes, employers try to bundle unpaid wages, unused vacation days, or other benefits you’re already entitled to into the severance agreement — as if they’re part of the deal.

That’s not how it works. In New Jersey, if your employer owes you final wages, accrued vacation, or bonuses you earned, they must pay you — regardless of whether you sign a severance agreement.

If you’re being asked to give something up in exchange for what you’ve already earned, don’t sign. That’s not a favor — they’re just following the law.

6. Signing Without Enough Time to Think

Some employers push for a quick signature. You might hear things like:

• “We need this back by the end of the day.”
• “This is a standard agreement.”
• “Everyone signs it.”

Under federal law, if you’re over 40 and the agreement involves waiving age discrimination claims, your employer must give you 21 days to review it and 7 days to revoke it after signing. Even if that doesn’t apply, it’s still your right to ask for time.

Take a breath. Read every word. Get advice. Don’t sign under pressure.

Why You Should Talk to a Severance Lawyer in NJ

Severance agreements are binding contracts — and once you sign, there’s no turning back.

Before you give up your right to sue, limit your future job options, or agree to strict silence, it’s worth getting a legal opinion. An experienced severance agreement attorney in New Jersey can:

• Review the agreement
• Explain what you’re giving up
• Negotiate better terms
• Spot illegal or overly broad clauses
• Help protect your rights and your future

If you’ve been laid off or let go and handed paperwork, don’t just sign and move on. Take the time to understand what’s at stake.

Protecting Your Future

A severance package might seem like a lifeline, especially during a difficult time. But if it comes with strings attached — especially the kind that limit your rights or silence your voice — it may not be worth it.

Before signing anything, make sure you’re not trading your long-term rights for short-term relief.

Need Help Reviewing a Severance Package?

You don’t have to figure this out on your own. Many workers overlook key severance pitfalls in NJ, like waiving legal rights, agreeing to harsh non-competes, or giving up money they’re already owed.

A seasoned attorney can help you spot those red flags, explain the fine print, and guide you toward a smarter, more informed decision.

Reach out today for a confidential review of your severance agreement. We’ll help you avoid the common traps and protect what matters most — your rights, your reputation, and your future.