What Employees Need to Know Before Signing a Severance Agreement
Most employees sign their severance without knowing they had leverage. Employers are counting on that.
Have you ever been handed a separation agreement and felt like you had no choice but to sign it?
Have you watched someone get walked out the door and wondered if the process actually aligned with the values posted on your company wall?
The instinct for most people is the same: take what's offered, move on, don't make it harder than it already is.
But there's a version of this story most employees never hear. Dan Goodman has spent years making sure they do.
(00:00) The Man Companies Didn't Expect to Exist
Dan Goodman is an Employee Advocate and Founder & CEO of Dan Goodman Employment Advisory (DGEA). He spent decades in corporate America in senior roles across cybersecurity, enterprise software, and executive consulting before starting to help people navigate disputes with their employers, initially at no charge and largely by word of mouth.
What started informally has grown into a firm that has helped nearly 1,800 people through some of the most high-stakes moments of their careers: severance negotiations, separation agreements, retaliation claims, commission disputes, and more.
He calls himself the counter to HR. Not because he thinks HR professionals are the enemy, but because he believes employees deserve someone in their corner who knows exactly how the game is played.
A client gave him the name before he even had a business. It stuck.
(08:00) Severance Isn't a Favor. It's a Transaction.
Here's something most people never get told when they're handed a separation agreement.
The employer needs something from you. Your signature. Your release of all claims. Your promise, in effect, to never sue.
Once you sign, every grievance, every valid complaint, every protection you may have had goes with it. You no longer exist to that company in any legal sense.
How employers typically frame it:
We care about your transition
We want to help you land on your feet
This is our way of thanking you for your time here
What's actually happening:
The employer is purchasing a legal release
You are the one with something they need
The opening offer is rarely the best offer
Most employees don't know they can negotiate. Many don't know what they're signing away. That information gap is intentional, and it costs people real money.
(22:00) The "PIP or Resign" Trap
One of the most common patterns Dan encounters now goes like this.
An employee gets pulled into a meeting. They're told their performance isn't meeting expectations. They're given a choice: go on a performance improvement plan, or accept a severance package and part ways now.
It sounds like a choice. It isn't.
The PIP is designed to be unachievable. The severance is structured as a mutual resignation rather than a termination. That distinction quietly eliminates unemployment eligibility, which the employee typically discovers weeks later when they file.
"They purposely give them misinformation to make those decisions on." — Dan Goodman, Founder & CEO, DGEA
The framing stays vague on purpose. The clock is tight on purpose. The person on the receiving end is usually too blindsided to understand what they're agreeing to.
For HR professionals reading this: if this pattern is happening at your organization, that's worth sitting with.
(34:00) What the Law Actually Says
A lot of employees operate on assumptions about their rights that don't hold up. A few things worth knowing:
If you're over 40, you are entitled to 21 days to review a severance agreement and 7 days to revoke after signing. In a group layoff, that review window extends to 45 days.
At-will employment does not mean an employer can terminate anyone for any reason. If you belong to a protected class, and most people do, wrongful termination claims are still possible. The difficulty is in proving them.
The NLRB ruled in February 2023 that non-disparagement clauses can no longer be included in severance agreements for non-managerial employees. Of the nearly thousand agreements Dan has reviewed since, he has seen one that addressed this correctly.
The legal landscape varies significantly by state. California and New York lean toward employee protections. Other states offer considerably less. Knowing which environment you're in matters.
(48:00) Building a Case Before You Need One
The employees who come to Dan with the strongest outcomes aren't always the ones with the clearest-cut situations. They're the ones who came prepared.
If you suspect a termination isn't straightforward, start here:
Document specific examples of how you've been treated, with dates, names, and context
Identify whether your termination could be connected to protected activity: leave taken, complaints filed, demographic factors
Understand what's in your separation agreement before signing anything
Know that for most non-managerial employees, signing a severance does not legally require your silence
The goal isn't to threaten litigation. It's to negotiate from the same level of information the employer already has.
What Good Looks Like on the Way Out
The case for treating employees with dignity during a layoff isn't soft. It's practical.
Former employees talk. They leave reviews. They refer people, or they warn them away. Companies that blindside people, that run bad-faith PIPs, that pressure employees into signing within 24 hours, are making a business decision. It tends to be a bad one.
The organizations that handle exits with transparency and fairness don't just avoid legal exposure. They build something harder to quantify and far more valuable: people who leave still rooting for them.
That doesn't require a big budget. It requires honesty about where someone stands before it becomes a termination conversation, clear communication about what they're signing, and enough respect for the years they gave to treat their departure the same way you treated their arrival.
Connect with Dan Goodman: dangoodmanea.com | LinkedIn: Dan Goodman / Dan Goodman Employment Advisory
Connect with Traci here: https://linktr.ee/HRTraci