What to Know About “Release of Claims” in NJ Severance Agreements

Severance can be helpful: time to land your next role, keep health coverage for a bit, and close a stressful chapter. But sometimes, New Jersey’s severance offer arrives with a release of claims. Signing one usually means giving up the right to sue over things that already happened at work. 

In the Garden State, several local and federal rules shape what a release can and cannot do. Some rights cannot be signed away at all, and others have strict conditions before a waiver is valid.

Let’s walk through how the law treats release of claims in severance, what special rules apply if you’re 40 or older, what happens with discrimination and harassment claims, and when you should talk with a severance agreement lawyer in New Jersey before signing.

What “Release Of Claims” Usually Means In New Jersey’s Severance

A standard New Jersey severance agreement often includes language saying something like: you “fully and forever waive, release, and discharge” all claims you have or may have against the company, its parents, subsidiaries, officers, managers, etc., through the date you sign.

That release is typically broad. It often names:

• Claims under the New Jersey Law Against Discrimination (NJLAD)
• Claims under the Conscientious Employee Protection Act (CEPA): New Jersey’s whistleblower law
• Claims under the New Jersey Wage and Hour Law and wage payment laws
• Claims under federal statutes like Title VII, the Americans with Disabilities Act (ADA), and many others
• Common-law claims such as emotional distress, breach of contract, or defamation

In some cases, depending on how the agreement was drafted, you can still sue after signing severance — especially if the release was overly broad, violated state law, or you were pressured or misled into signing it.

These situations can be complex, and the enforceability of a release often turns on small but critical details — such as the exact wording, timing, and consideration offered in exchange for your signature.

Because these agreements combine legal and financial implications, consulting an experienced severance agreement attorney in New Jersey can help you determine if your waiver is valid, whether your rights were compromised, and how to handle the tax implications of your severance pay before you sign.

You Are Often Waiving Rights You Already Have Under NJ Law

When you sign a severance agreement, you may be signing a release of claims: a legal document that limits your ability to sue later. In most cases, the company is offering payment in exchange for finality. It can also include non-disparagement clauses that restrict what you can say about your former employer after leaving.

When you sign a release, you are typically giving up the right to sue later under:

• NJLAD, which bans discrimination, harassment, and retaliation based on protected traits such as race, sex, pregnancy, disability, age, national origin, religion, sexual orientation, gender identity, and others, and allows employees to seek back pay, emotional distress damages, and in some cases punitive damages. The Division on Civil Rights (DCR) enforces NJLAD, and you can also sue directly in New Jersey Superior Court.
• CEPA, New Jersey’s whistleblower statute, which protects workers who report or refuse to participate in illegal or fraudulent conduct. CEPA is one of the strongest anti-retaliation laws in the country, and a CEPA claim can seek lost wages, emotional distress damages, and attorneys’ fees.
• State wage and hour laws, including overtime and wage theft remedies. New Jersey’s wage theft reforms allow recovery of back wages plus liquidated damages up to 200 percent of unpaid wages, along with possible civil penalties against the employer.
• Federal protections, including Title VII (discrimination and retaliation), ADA (disability discrimination), FMLA (interference and retaliation related to protected leave), and ADEA (age discrimination for workers 40+).

Once you sign a valid release that covers those claims, you generally cannot turn around and sue for them later — even if you later uncover documents that make your case look stronger than you realized at the time. 

That’s why negotiating is important. Even if the company frames the package as “standard” or “non-negotiable,” it usually isn’t set in stone. In reality, you have the right to review and question the terms before signing, even when negotiating severance after a performance-based termination.

Confidentiality And Non-Disparagement In New Jersey Are Changing 

Until a few years ago, most severance agreements in New Jersey included strict confidentiality and non-disparagement clauses. The message was: “We’ll pay severance. You won’t talk about what happened, and you won’t say anything negative about us.”

That is no longer so simple.

In 2019, the state amended NJLAD to limit gag clauses in agreements that settle or resolve claims of discrimination, harassment, or retaliation. The law says:

• Any clause in an employment contract or settlement agreement that has “the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment” is against public policy and is unenforceable against the employee.
• Agreements resolving discrimination, retaliation, or harassment claims have to include a bold, prominently placed notice explaining that certain confidentiality promises cannot be enforced against the employee if they later disclose enough details about the claim so that the employer is reasonably identifiable. 

If your severance agreement is, functionally, a settlement of a discrimination, harassment, or retaliation dispute, New Jersey says the company cannot permanently silence you in order to hide what happened.

Some employers may attempt to bundle other benefits, such as healthcare coverage other than COBRA, in severance. While this can be part of a legitimate compensation package, it should never be used to pressure an employee into giving up rights or signing away claims that involve protected conduct.

The employer may still ask for mutual non-disparagement and confidentiality around pure business information (client lists, strategy, trade secrets). But it cannot lawfully stop you from discussing the facts of alleged discrimination, harassment, or retaliation forever.

Can You Be Forced To Sign A Release Claim In New Jersey’s Severance?

A severance agreement is generally voluntary. New Jersey law does not require an employer to offer severance, and it does not require you to accept it.

But there are two realities:

• Employers often condition severance pay — and sometimes extras like extended health coverage contributions, or neutral references — on signing the release.
• If you refuse, you may not get those benefits. If you agree, you usually cannot go back later and sue on released claims.

That puts pressure on people, especially during a sudden layoff. Before signing anything, it’s wise to speak to a lawyer in New Jersey who can review your severance agreement, explain what you may be giving up, and help you negotiate stronger terms or additional benefits where possible.

If you are 40 or older, federal law adds extra protections before you can validly waive age discrimination claims under the Age Discrimination in Employment Act’s amendment, the Older Workers Benefit Protection Act (OWBPA). Your employer must give you time (21 or 45 days, depending on whether it’s an individual or group layoff), and you also get 7 days after signing to revoke. 

Get Legal Guidance On Your New Jersey Severance Agreement

If you have been offered severance in New Jersey and the agreement includes a broad “release of claims,” you do not have to guess what you are giving up. 

Our team reviews severance agreements that involve discrimination, retaliation, and whistleblower claims, and wage or overtime issues.

We can walk you through what the company is asking you to sign, if the terms comply with New Jersey law, and what leverage you may have to negotiate for more.

Contact Us Today