Severance agreements aren’t enforceable unless they’re backed by separate consideration—meaning you must literally offer something of value that the employee is not already entitled to. This is one of the most overlooked yet essential aspects of a valid release.

Continued health insurance, unused vacation pay, or already-earned wages don’t count. You have to give something new—typically money, benefits, or some tangible benefit like outplacement services. And here’s where things get tricky: deciding how much to offer isn’t governed by any fixed rule. There’s no magic formula like “two weeks for every year of service,” and the right amount often depends on context.

Offer too little, and you risk insulting the employee—especially if there’s a viable legal claim. Offer too much, and it may signal fear, or even embolden someone who hadn’t planned on pursuing a claim at all. The right severance package strikes a careful balance: enough to make the release meaningful, not so much that it suggests liability.

Finding that balance is an art, not a science. When in doubt, talk to counsel about what’s reasonable in your jurisdiction and industry.

Even the most generous severance agreement is worthless if it's not legally enforceable. If you’re going to pay an employee to walk away, you should be receiving something in return—a release of claims. But if the agreement doesn’t comply with federal and state law, that release can be thrown out entirely.

This means the employee keeps the money, still files a complaint, and you end up defending the exact claims you thought you had avoided. Worse, you now have to hire a lawyer anyway, but with fewer defenses on the table.

You never give anything away for free in business—and severance is no different. If you’re offering severance to reduce risk, make sure it actually does that. A single mistake in timing, wording, or scope could cost you the entire benefit of the bargain.

Before you hand over a check, ask yourself: Did we get it right? And if you’re not sure—ask Jacobs & Associates. Because when severance is done wrong, you still pay. You just don’t get peace of mind.

A 60-year-old warehouse supervisor was let go as part of a workforce reduction. The company, in an effort to minimize disruption, offered three weeks’ severance and a generic release of claims. The employee had been with the company for 18 years, had excellent performance reviews, and had recently begun reporting to a new manager.

The agreement:

The employee signed and cashed the check—then filed an age discrimination complaint with the EEOC. The agency ruled the waiver unenforceable because it violated OWBPA’s requirements for older workers. The attempt to block government filings further undermined the release. During investigation, the EEOC discovered that five of the six terminated employees in the same round were over age 55, while all retained workers were under 40. The matter escalated to federal court, where the agreement was not only deemed invalid—it became evidence of the employer’s lack of procedural fairness.

What went wrong:

The company made several critical errors that unraveled the protections they thought they had. First, they failed to follow the mandatory waiting periods outlined in the OWBPA, giving the employee only seven days to sign—a far cry from the 21 or 45 days required depending on the context. Second, the agreement improperly attempted to block the employee from filing complaints with government agencies, a move that violates federal law and rendered the release unenforceable. Third, because this was part of a broader workforce reduction, the employer failed to disclose the ages and job titles of those laid off and those retained, which is a required element in group termination scenarios. And finally, the payment offered—just three weeks of pay—was not perceived as meaningful given the employee’s tenure, which could have supported a higher claim.

These errors collectively exposed the company to further investigation and litigation.

A New York City tech company undergoing restructuring consulted legal counsel to draft severance agreements for 12 employees affected by a department-wide reorganization.

The employees were all given:

In addition, the company:

No claims were filed. Several employees later gave positive feedback to the company’s HR department—even referring others for open positions down the line.

What they got right:

Instead of viewing severance agreements as boilerplate documents or mere gestures of goodwill, think of them as a legal firewall—a purpose-built layer of protection that helps contain risk and minimize the chance of litigation. Like any good firewall, its job is to keep harmful claims from breaching the boundary. But to work effectively, every piece of the agreement must be lawfully structured, properly timed, and clearly written.

Your goal isn’t generosity—it’s risk mitigation. An airtight severance agreement won’t just close the door on future claims—it will document that you did things the right way.

Here’s what you need:

A well-drafted severance agreement is more than just paperwork—it’s a strategic safeguard that protects both employer and employee during a vulnerable moment of transition. It clarifies rights, fulfills obligations, and reduces the risk of future disputes when emotions and stakes are high. Done right, it ensures a respectful departure while shielding the company from legal exposure. In short, it’s one more way employers can stay compliant, be generous, and—above all—keep fighting the good fight.