New Jersey Severance Agreements: What to Know

Quick Answer: New Jersey employers aren't required to offer severance, but many do in exchange for a release of legal claims. You have rights to review time, can negotiate terms, and should understand you may be giving up valuable claims under LAD and CEPA.

Don't sign without understanding what you're releasing.

Severance Basics

Not Required by Law

Key points:

• No statutory requirement
• Voluntary employer decision
• May be required by contract
• Company policy may apply

Why Employers Offer Severance

Common reasons:

• Obtain release of claims
• Avoid litigation
• Protect reputation
• Smooth transitions
• Confidentiality

Typical Components

May include:

• Cash payment
• Continued benefits
• Outplacement services
• Reference agreement
• Non-disparagement clause

Release of Claims

What You're Releasing

Typically includes:

• LAD discrimination claims
• CEPA whistleblower claims
• Wage and hour claims
• Contract claims
• All employment-related claims

New Jersey-Specific Claims

Consider value of:

• LAD claims (no damages cap)
• CEPA claims (strong remedies)
• Wage claims (liquidated damages)
• Strong state protections

Claims That Cannot Be Released

Protected:

• Future claims
• Workers' comp rights
• Unemployment benefits
• COBRA rights
• Some whistleblower rights

OWBPA Requirements (Age 40+)

Federal Requirements Apply

If you're 40+:

• 21 days to consider (individual)
• 45 days for group layoffs
• 7-day revocation period
• Written in plain language
• Advised to consult attorney

Group Layoff Disclosures

Must receive:

• Eligibility factors
• Time limits for decision
• Job titles affected
• Ages of those selected/not selected

Negotiating Severance

Everything Is Negotiable

Consider requesting:

• Higher payment amount
• Extended benefits
• Better reference terms
• Non-compete modification
• Cooperation clause limits

Leverage Points

Stronger position if:

• Potential LAD claims
• Potential CEPA claims
• Institutional knowledge
• Senior position
• Needed for transition

Common Improvements

Often achievable:

• More severance weeks
• COBRA payment
• Neutral reference
• Non-compete release
• Outplacement services

Key Terms to Review

Non-Disparagement

Watch for:

• Scope of restriction
• Mutual or one-sided?
• Social media coverage
• Exceptions for legal proceedings

Confidentiality

Understand:

• What's covered
• Family discussions allowed?
• Future employer discussions
• Legal exceptions

Non-Compete Provisions

Critical review:

• Existing agreement modified?
• New restrictions?
• Scope and duration
• Enforceability concerns

Cooperation Clauses

May require:

• Future testimony
• Document provision
• Ongoing assistance
• Usually reasonable

Before Signing

Evaluate Your Claims

Consider:

• Discrimination experienced?
• Whistleblower activity?
• Wages owed?
• Contract violations?

Calculate Claim Value

Factor in:

• LAD damages (uncapped)
• CEPA remedies (attorney's fees)
• Wage claim liquidated damages
• Likelihood of success

Get Legal Review

Attorney can:

• Evaluate claim value
• Identify red flags
• Negotiate improvements
• Ensure compliance

Timing Considerations

Review Period

Take time:

• Don't sign under pressure
• Use full review period
• OWBPA requires 21-45 days
• Negotiate more time if needed

Revocation Period

OWBPA provides:

• 7 days after signing
• Can change mind
• Return severance if revoke
• Cannot be waived

Effective Date

Understand:

• When release effective
• When payment made
• Employment end date
• Benefits end date

Red Flags

Overly Broad Releases

Watch for:

• Releasing third-party claims
• Future unknown claims
• Non-employment claims
• Intellectual property issues

One-Sided Terms

Questionable:

• Only you restricted
• No mutual non-disparagement
• Excessive confidentiality
• Unreasonable cooperation

Hidden Restrictions

Look for:

• New non-compete terms
• Non-solicitation expansion
• Industry restrictions
• Geographic limitations

Common Scenarios

Scenario 1: Layoff Package

Situation: Offered 2 weeks per year of service.

Analysis: Standard starting point. Negotiate up, especially with tenure and potential claims.

Scenario 2: Discrimination Victim

Situation: Believe you were discriminated against, offered severance.

Analysis: Significant leverage. LAD claims are valuable. Consult attorney before signing.

Scenario 3: CEPA Claim Potential

Situation: Reported violations, now being terminated with severance.

Analysis: CEPA claims valuable. Don't release without significant consideration.

Scenario 4: Executive Departure

Situation: Senior executive with negotiated exit.

Analysis: Everything negotiable. Stock, bonuses, benefits, and non-compete terms all in play.

After Signing

What Happens Next

Typical process:

• Waiting period expires
• Payment processed
• Benefits transition
• Agreement effective

Keeping Your Obligations

Remember:

• Confidentiality continues
• Non-disparagement applies
• Cooperation may be required
• Return company property

Frequently Asked Questions

Is severance required in New Jersey?

No. It's voluntary unless required by contract or company policy.

Can I negotiate severance?

Yes. Almost everything is negotiable, especially with leverage.

How long do I have to decide?

Varies. If 40+, minimum 21 days (individual) or 45 days (group). Negotiate more time.

Should I consult a lawyer?

Recommended, especially if you have potential claims or significant severance offered.

Related Topics

• New Jersey Employment Contracts
• New Jersey Workplace Discrimination
• New Jersey Whistleblower Protections
• New Jersey Employment Law Hub

Take Action

If offered severance:

1. Don't sign immediately
2. Evaluate potential claims
3. Review all terms carefully
4. Consult employment attorney
5. Negotiate improvements
6. Use full review period

Legal Disclaimer

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

For official information:

• NJ Department of Labor: https://www.nj.gov/labor/