A severance agreement, annotated
Below is a severance agreement of the kind that arrives by email on a Friday — condensed, but clause for clause the real thing. The margin is what we would tell you about each paragraph. Read it once here, and yours will look different.
SPECIMEN — SEPARATION AGREEMENT AND GENERAL RELEASE (fictional employer; typical language)
¶1 — Separation; final pay. “Employee’s employment ends effective March 6. Regardless of whether Employee signs this Agreement, the Company will pay all final wages, including accrued unused vacation, as required by law.” 1
¶2 — Severance. “In consideration of this Agreement, the Company will pay Employee the equivalent of eight (8) weeks of base salary, less withholdings, within 14 days of the Effective Date.” 2
¶3 — General release; waiver of unknown claims. “Employee releases the Company from all claims, known and unknown, arising on or before execution… Employee waives all rights under Civil Code section 1542, which provides: ‘A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release…’” 3
¶4 — Consideration period; revocation. “Employee has 21 days to consider this Agreement and is advised to consult an attorney. Employee may revoke within 7 days of signing; the Agreement becomes effective on the 8th day.” 4
¶5 — Confidentiality; permitted disclosures. “Employee shall keep the terms of this Agreement confidential… Nothing herein prevents Employee from discussing or disclosing information about unlawful acts in the workplace, including harassment or discrimination, or from communicating with government agencies.” 5
¶6 — Non-disparagement. “Employee shall not make disparaging statements about the Company, subject to the exceptions stated in ¶5.” 6
¶7 — No re-employment. “Employee agrees not to apply for employment with the Company or its affiliates.” 7
¶8 — Cooperation. “Employee will reasonably cooperate with the Company in any legal matter relating to Employee’s period of employment.” 8
The margin
1 The correct clause — and a tell. Final wages, including vacation, are owed regardless of signing; California forbids trading them for a release. An agreement that instead bundles final pay into the “consideration” has misstated the law in its first paragraph, and that tells you how carefully to read the rest.
2 The number is an opening position, priced off the risk the employer thinks it is buying — read our severance guide’s section on the number before treating eight weeks as a fact of nature. Also check what is missing here: equity treatment, COBRA contribution, the agreed reference. Silence in ¶2 is negotiating room.
3 The heart of the document. The §1542 waiver releases even claims you have not discovered yet — the unpaid premiums you did not know were wages, the misclassification you never audited. This is the paragraph that makes pre-signature review worth it, every time.
4 The 21/7 structure means an age release under federal law (40 and older). Two checks: California separately entitles you to notice of your right to counsel and not less than five business days — its absence from this specimen is itself a defect — and nothing is final until the revocation window closes.
5 The carve-out language is not generosity; since 2022 it is required. An agreement that omits it, or writes confidentiality broader than the statute allows, is overreaching in a way a court — and a negotiator — can use.
6 One-way non-disparagement is the default draft. Ask for mutuality, or at minimum a no-disparagement commitment from named executives. It costs the employer nothing, which is exactly why it is omitted until requested.
7 Broad no-rehire clauses deserve scrutiny: “affiliates” can quietly cover half an industry, and where you had already raised a legal claim, California restricts these provisions. Narrow the entities, or strike it.
8 Unbounded cooperation is an unpaid job. Cap the hours, require reimbursement of expenses and lost wages, and require reasonable scheduling. Employers agree to this routinely — once someone asks.
The exercise, honestly framed. No two agreements are identical, and a specimen cannot read yours. But the anatomy is stable: the money, the release, the clocks, the gags, the tail obligations. Bring the real one to us with the dates — the review is a conversation, not a project, and it is the best-leveraged hour in employment law.
Related writing: The severance agreement on your kitchen table · Your last paycheck: the 72-hour rules
Specimen and annotations state California and federal law as of the revision date; the document is fictional and typical, not a template for use.
This article states California law as of its revision date and is analysis, not legal advice. Reading this site does not create an attorney-client relationship. Attorney advertising.