Explain My Severance - Part 1: The Release

Explain my severance:  What is it?

The Release is your promise not to sue the company. The release is part of the consideration that you give the company in exchange for severance.

Explain my severance: Not to sue for what?

You promise not to sue for pretty much anything that happened before you signed the agreement. A release may only be retrospective (backwards looking), not prospective (you cannot release what has not yet happened). Note, however, that a release covers not only things that you know about, but also things you don't.  A release typically contains a carveout for lawsuits brought by government agencies (like the EEOC), but even when the release has this carve-out, there is usually a clause that says that you cannot recover money based on a government lawsuit.

Explain my severance: Who?

You agree to never sue pretty much anyone ever affiliated with the company. Releases tend to contain broad definitions of the “employer” and/or the “company.”  Also, releases are typically unilateral (you promise not to sue the company, but the company does not promise not to sue you).  Some employees get hung up on this, but, practically speaking, the employee rarely needs a release.

Explain my severance: The Upshot.

The release is typically the most intimidating section of a severance agreement. This is probably because the release is usually the wordiest section of a severance agreement and contains a long list of laws, rules, government agencies, etc. The main thing to take away from your release is that – with very limited exceptions – you cannot sue your employer for anything that happened before you sign the release.

That, really, is the nature of the deal made in signing a severance agreement.  In exchange for severance (money, reference, benefits, etc.), you promise to go away and not create problems for the company.  One of the ways you can create problems for the company is by suing the company.  By signing a release, you give up your right to do so.

If you need help with your severance agreement, please feel free to contact us.  We charge a reasonable flat fee to review your severance agreement and offer same-day service.

Sample Release (annotated)

Read More:

Explain My Severance - Part 2:  The Neutral Reference

Explain My Severance - Part 3:  Non-Disparagement Clause

Explain My Severance - Part 4:  Non-Admission Clause