Michigan Severance Agreements: What to Know Before Signing

Quick Answer: Severance agreements in Michigan are negotiable contracts exchanging benefits for a release of claims. Employers are not legally required to offer severance. If you're 40 or older, federal OWBPA requires 21 days to consider and 7 days to revoke. Evaluate ELCRA claims (3-year deadline) before signing—you may have significant leverage.

Your signature releases valuable rights. Know their worth.

Severance Basics

What Is Severance

A contract that:

• Provides payment after termination
• Requires release of legal claims
• Is negotiable
• Not legally required

Michigan Context

Consider:

• ELCRA's broad protections
• 3-year deadline for discrimination claims
• Strong state law leverage
• OWBPA if 40+

OWBPA Requirements (Age 40+)

Special Protections

If you're 40 or older:

• Written in plain language
• Specifically mentions ADEA
• 21 days to consider
• 7 days to revoke after signing
• Advises consulting attorney

Group Layoffs

45-day consideration:

• For group terminations
• Additional disclosures required
• Demographics of who selected

Invalid Without

Agreement unenforceable if:

• Time requirements not met
• Doesn't mention ADEA
• No revocation period
• Signed under duress

What You're Giving Up

Typical Release

Claims released:

• ELCRA discrimination claims
• Title VII claims
• ADEA claims
• Wrongful termination
• Wage claims (be careful)

Michigan-Specific Claims

May be releasing:

• ELCRA discrimination (all employers)
• ELCRA retaliation
• WPA whistleblower claims
• Implied contract claims

What Can't Be Waived

Cannot release:

• Future claims
• Unemployment benefits
• Workers' compensation
• Vested pension/401(k)
• COBRA rights

Evaluating Your Claims

ELCRA Leverage

Strong state law:

• Covers all employers (1+ employee)
• 3-year deadline
• No damage caps
• Broad protections

Claims to Assess

Before signing, evaluate:

• Discrimination (any protected class)
• Sexual harassment
• Retaliation
• LGBTQ+ discrimination
• Height/weight discrimination

Timing Advantage

ELCRA's 3-year deadline:

• Gives you time to evaluate
• Don't rush into signing
• Claims still valuable

Negotiation Points

Often Negotiable

Ask about:

• Severance amount
• Health insurance continuation
• Reference language
• Non-compete modification
• Non-disparagement (mutual)
• Rehire eligibility

Non-Compete Consideration

If you have non-compete:

• Negotiate release or narrowing
• Get something for continuing restrictions
• Specific carve-outs

Review Period

Under 40

No legal minimum:

• Whatever employer offers
• Ask for more time if needed
• Take time to review

40 or Older

OWBPA minimums:

• Individual: 21 days
• Group: 45 days
• 7-day revocation
• Must be honored

Non-Disparagement Clauses

Employer Wants

One-way clause:

• You won't criticize company
• Broad language
• Penalties for violation

Negotiate Mutual

Request:

• Employer also bound
• Specific reference language
• Protections for you

Common Scenarios

Scenario 1: Quick Pressure

Situation: Told to sign today or lose offer.

Analysis: If 40+, they must give 21 days. Push back.

Scenario 2: Possible Discrimination

Situation: Suspect discrimination. Offered modest severance.

Analysis: ELCRA claims may be worth more. Consult attorney.

Scenario 3: Non-Compete Included

Situation: Severance includes continuing non-compete.

Analysis: Negotiate narrower terms or additional compensation.

Mistakes to Avoid

Don't Rush

Take your time:

• Use full review period
• Evaluate your claims
• Consult attorney

Don't Assume Low Value

Your claims may be worth:

• More than offered severance
• Significant damages under ELCRA
• Leverage for negotiation

Don't Ignore Non-Compete

Review carefully:

• New restrictions?
• Enforcing old ones?
• Trade-offs needed

Frequently Asked Questions

Is severance required in Michigan?

No. Employers have no legal obligation to offer severance.

How long to review?

If 40+, minimum 21 days. Under 40, whatever offered.

Should I consult an attorney?

Highly recommended, especially if you have potential claims.

Can I revoke after signing?

If 40+, you have 7 days to revoke. Under 40, generally no.

What about my ELCRA claims?

Evaluate carefully before signing. 3-year deadline gives you time.

Related Topics

• Michigan Employment Law Hub
• Elliott-Larsen Civil Rights Act Guide
• Michigan Non-Compete Agreements
• Michigan At-Will Employment

Take Action

If offered severance:

1. Don't sign immediately
2. Take full review period
3. Evaluate ELCRA and other claims
4. Consult employment attorney
5. Negotiate improvements
6. Understand what you're releasing

Legal Disclaimer

This article provides general information about severance agreements in Michigan and is not legal advice. For specific advice, consult a licensed Michigan employment attorney.