WHAT DOES "RELEASE OF CLAIMS" MEAN IN A SEVERANCE AGREEMENT?

If you've just received a severance agreement, you've almost certainly seen the phrase "release of claims" — probably in a section that takes up several pages and is packed with legal terminology. It's one of the most consequential parts of the entire document, yet it's often the hardest to understand.

Here's the plain-English version: a release of claims is a legal agreement in which you give up your right to sue your employer for anything related to your employment or termination. In exchange, you receive severance pay.

That's the core of it. But the details matter enormously — and they vary significantly from agreement to agreement.

What Exactly Are You Giving Up?

When you sign a release of claims, you are typically waiving your right to pursue legal action against your employer for a wide range of potential violations. A broad release — which is standard in most severance agreements — covers claims under virtually every major employment law, including:

• Title VII of the Civil Rights Act — discrimination based on race, color, religion, sex, or national origin
• Age Discrimination in Employment Act (ADEA) — discrimination against employees 40 and older
• Americans with Disabilities Act (ADA) — disability discrimination
• Family and Medical Leave Act (FMLA) — retaliation for taking protected leave
• Fair Labor Standards Act (FLSA) — unpaid wages, overtime violations
• State and local employment laws — which vary significantly by state
• Wrongful termination claims — including breach of contract or violation of public policy
• Harassment and retaliation claims

In short: if you believe your employer wronged you in any way connected to your employment, signing a broad release of claims means you are permanently giving up your ability to seek legal remedy for those wrongs.

What Can't Be Released?

Not everything can be legally waived in a release of claims. Certain rights are protected by law and cannot be signed away, regardless of what the agreement says:

• The right to file a charge with the EEOC — you can still file a discrimination charge with the Equal Employment Opportunity Commission, though you typically waive the right to receive monetary damages from it
• Claims for vested retirement benefits — your 401(k) contributions and vested employer match cannot be taken away
• Workers' compensation claims
• Claims that arise after you sign — the release only covers events that occurred before the signing date
• Certain state-specific protections — some states provide additional protections that cannot be waived

Special Protections If You're Over 40: ADEA and OWBPA

If you are 40 years of age or older, federal law gives you additional protections specifically around the ADEA waiver portion of your release. Under the Older Workers Benefit Protection Act (OWBPA), for a waiver of ADEA rights to be valid, your agreement must:

• Be written in plain language that you can understand
• Specifically reference the ADEA by name
• Advise you in writing to consult with an attorney before signing
• Give you at least 21 days to consider the agreement (45 days if part of a group layoff)
• Allow you a 7-day revocation period after signing, during which you can change your mind

If any of these requirements are missing from your agreement, the ADEA waiver may be unenforceable — which is a significant issue worth raising with an employment attorney.

Red Flags to Watch For

Not all releases are created equal. Here are specific things that should prompt you to take a closer look — or consult an attorney:

• Extremely broad language — phrases like "any and all claims, known or unknown, arising from the beginning of time" are common but worth scrutinizing
• Missing ADEA language if you're over 40 — see the checklist above
• Carve-outs that favor only the employer — some agreements allow the company to sue you but restrict your ability to make any claims
• Releases of future claims — you generally cannot release claims that haven't arisen yet, and such provisions may be unenforceable
• No mention of specific claims you believe you have — if you experienced discrimination or harassment, consult an attorney before signing anything

Should You Sign?

That's a legal question — and it's one only a licensed employment attorney can properly answer for your specific situation. What we can tell you is this: you should understand exactly what you're signing before you sign it.

The release of claims is not boilerplate filler. It is the central exchange at the heart of your severance agreement: money and benefits, in exchange for your legal rights. Whether that trade is worthwhile depends on your specific circumstances — your industry, your state, whether you believe any legal violations occurred, and how much the severance is worth to you.

Key Takeaways

• A release of claims permanently waives your right to sue your employer for employment-related violations
• Most releases are broad and cover a wide range of federal and state employment laws
• Some rights — like filing an EEOC charge or keeping your vested 401(k) — cannot be waived
• If you're over 40, the ADEA/OWBPA gives you specific review period and revocation rights
• Always consult a licensed employment attorney if you believe you may have legal claims before signing any release