Severance Package Checklist: What to Ask Before You Sign
The short version:
A severance agreement is a legal contract, not just a check. Don't sign on the spot -- take it home, read it carefully, and work through the questions below first.
1. How is the severance amount calculated?
Many employers use a formula like a set number of weeks of pay per year of service, sometimes with a minimum. Ask what formula was used and whether it matches your actual tenure and pay.
2. Is it a lump sum, or salary continuation?
A lump sum arrives faster but may affect unemployment eligibility differently than continued "salary" payments, depending on your state. Ask which it is and how it will be taxed.
3. What happens to unused PTO, bonuses, commissions, and equity?
Confirm in writing whether unused vacation time is paid out, whether any pending bonus or commission is still owed, and what happens to unvested stock or options -- some plans allow a short extension to exercise vested options.
4. What happens to your health insurance?
Ask exactly when coverage ends and whether the company is offering any subsidized continuation period before COBRA's full cost kicks in.
5. Is there a release of claims?
Most severance agreements ask you to waive your right to sue over the termination in exchange for the severance pay. Understand what rights you're giving up before you sign.
6. Is there a legally required review period?
If you're 40 or older, federal law (the Older Workers Benefit Protection Act) generally requires at least 21 days to consider an individual severance agreement (45 days for a group layoff), plus a 7-day period to revoke your signature afterward. Don't let anyone rush you past that.
7. Is there a non-compete, non-solicitation, or non-disparagement clause?
These can limit where you can work next or what you can say publicly. Read them carefully -- they sometimes outlast the severance payments themselves.
8. Are outplacement services included?
Some packages include resume help, career coaching, or job-search resources at no cost to you. Ask if this exists and how to access it before it expires.
9. Can the offer be negotiated?
Severance terms aren't always final. It doesn't hurt to ask, especially around the payment amount, the release scope, or the timeline -- worst case, the answer is no.
10. Should an employment attorney review it?
For anything beyond a simple, small severance, a one-time consultation with an employment attorney is often worth the cost, especially if there's a release of claims or a non-compete involved.
A note on timing
It's common to feel pressure to sign quickly, especially if the offer comes with a deadline. But a legitimate severance agreement should survive a few days of careful reading -- and if you're 40 or older, you're generally entitled to more time than that by law. Taking the agreement home to read it is a completely normal request, not a confrontational one.
LayoffOS keeps your runway estimate, deadlines, benefits, and job search organized in one place.
This guide is educational and organizational information, not legal advice. Every severance agreement and state's laws differ -- talk to a qualified employment attorney before signing anything you're unsure about. See the full disclaimer.