Pennsylvania Severance Agreements: What to Know Before Signing

Quick Answer: Severance agreements in Pennsylvania are negotiable contracts exchanging benefits for a release of claims. Employers are not legally required to offer severance. If you're 40 or older, the Older Workers Benefit Protection Act (OWBPA) requires 21 days to consider and 7 days to revoke. You can often negotiate better terms. Never sign without understanding what you're giving up.

Your signature has consequences. Know what you're agreeing to.

Severance Basics

What Is a Severance Agreement

A contract that typically:

• Provides payment after termination
• Requires release of legal claims
• May include other benefits
• Is negotiated between parties

Is Severance Required?

No legal requirement:

• Pennsylvania doesn't mandate severance
• Purely contractual/discretionary
• Unless employment contract requires it
• Or company policy promises it

Why Employers Offer Severance

Benefits to employer:

• Get release of claims
• Avoid litigation risk
• Smooth transition
• Maintain goodwill
• Protect confidential information

Typical Severance Components

Severance Pay

Common formulas:

• Weeks per year of service
• Flat amount
• Continuation of salary
• Negotiable

Health Insurance Continuation

May include:

• COBRA payment
• Continued coverage period
• Subsidy for insurance

Other Benefits

Potentially included:

• Outplacement services
• Career counseling
• Reference letter
• Bonus payments
• Stock vesting
• Vacation payout

What You Give Up

Release typically covers:

• Discrimination claims
• Wrongful termination
• Wage claims
• All employment-related claims
• Sometimes future claims

OWBPA Requirements (Age 40+)

Special Protections

If you're 40 or older:

• Older Workers Benefit Protection Act applies
• Specific requirements for valid waiver
• Designed to protect older workers

Required Elements

For valid ADEA waiver:

1. Written in plain language
2. Specifically mentions ADEA/age claims
3. Doesn't waive future claims
4. Provides consideration beyond what's owed
5. Advises consulting attorney
6. Gives 21 days to consider
7. Allows 7 days to revoke

Time Periods

21-day consideration period:

• For individual terminations
• Can sign earlier but still have 21 days
• Don't be rushed

45-day consideration period:

• For group layoffs/RIFs
• Additional disclosure requirements
• Must identify decision unit and criteria

7-day revocation period:

• After signing
• Can revoke for any reason
• Agreement not effective until revocation period passes

Information for Group Layoffs

Employer must provide:

• Job titles and ages of those selected
• Job titles and ages of those not selected
• Selection criteria
• Time limits

Reviewing the Agreement

Key Sections to Examine

Release of claims:

• What are you waiving?
• What claims does it cover?
• Are any claims preserved?

Severance payment:

• How much?
• When paid?
• Lump sum or installments?
• Tax treatment?

Confidentiality:

• What's covered?
• Any exceptions?
• Mutual or one-way?

Non-disparagement:

• What can't you say?
• Is it mutual?
• Any carve-outs?

Non-compete/Non-solicit:

• Any post-employment restrictions?
• Reasonable in scope?
• Already have existing one?

Cooperation clause:

• Future testimony required?
• Assist with litigation?
• Compensated for time?

Red Flags

Watch for:

• Very short deadline to sign
• No OWBPA compliance (if 40+)
• Broad unknown claims waiver
• One-sided confidentiality
• Unreasonable non-compete
• Inadequate consideration

What You May Be Waiving

Employment Claims

Typical releases cover:

• Discrimination (PHRA, Title VII)
• Age discrimination (ADEA)
• Harassment claims
• Wrongful termination
• Retaliation claims

Wage Claims

May waive:

• WPCL claims
• FLSA claims
• Overtime claims
• Bonus disputes

What Can't Be Waived

Cannot release:

• Future claims
• Unemployment benefits
• Workers' compensation
• Right to file EEOC charge
• Vested pension benefits

Negotiation Strategies

Before Negotiating

Assess your position:

• Do you have potential claims?
• How strong are they?
• What's your leverage?
• What do you need?

Common Negotiation Points

Often negotiable:

• Severance amount
• Health insurance duration
• Non-compete scope
• Reference language
• Timing of payment
• Non-disparagement mutual

How to Negotiate

Best practices:

• Respond professionally
• Put requests in writing
• Explain your reasoning
• Propose specific alternatives
• Be realistic
• Consider attorney

Leverage Points

Stronger position if:

• Potential discrimination claim
• Long tenure
• Senior position
• Knowledge of wrongdoing
• Non-compete issue

Common Scenarios

Scenario 1: Age-Based Layoff

Situation: You're 55, laid off in "restructuring." Offered 2 weeks per year.

Analysis: OWBPA applies. You have 21 days to consider. If group layoff, request required disclosures. Evaluate if you have age discrimination claim before releasing.

Scenario 2: Harassment Settlement

Situation: After reporting harassment, employer offers severance to "part ways."

Analysis: This may indicate recognition of potential claim. Evaluate strength of harassment/retaliation case. May be significant leverage for negotiation.

Scenario 3: Quick Sign Pressure

Situation: Employer says sign today or lose the offer.

Analysis: If you're 40+, this may violate OWBPA. Don't be pressured. Ask for time in writing. Rushed deadline is red flag.

Scenario 4: Non-Compete in Severance

Situation: Severance includes new non-compete you never signed.

Analysis: They're asking you to agree to new restriction. Negotiate it out or down. You're giving up something—get something in return.

Special Considerations

Existing Claims

If you have claims:

• Value them before signing
• Consult attorney
• May have leverage
• Don't release valuable claims cheaply

EEOC Charges

Important:

• Cannot waive right to file EEOC charge
• Can waive right to monetary recovery
• If charge already filed, consider implications

Unemployment Benefits

Severance and unemployment:

• Cannot waive unemployment rights
• Severance may affect timing
• Lump sum vs. continuation matters
• Check PA rules

Taxes

Consider:

• Severance is taxable income
• May want payments structured
• Health benefits treatment
• Consult tax advisor

After Signing

Keep a Copy

Always:

• Get fully signed copy
• Store securely
• Know your obligations

Comply with Terms

Follow:

• Confidentiality requirements
• Non-disparagement terms
• Non-compete if applicable
• Return of property

If Employer Breaches

Options:

• Document breach
• Seek enforcement
• May void release in some cases
• Consult attorney

When to Get Legal Help

Strongly Recommended If

Consider attorney when:

• Large severance amount at stake
• You have potential claims
• Agreement is complex
• Non-compete included
• You're 40+ and terms seem rushed
• Something feels wrong

What Attorney Can Do

Attorney helps by:

• Evaluating potential claims
• Identifying negotiation leverage
• Reviewing agreement terms
• Negotiating better terms
• Explaining what you're waiving

Cost Considerations

Options:

• Flat fee review
• Hourly consultation
• May be worth investment
• Compare to what you're signing away

Frequently Asked Questions

Is my employer required to give severance?

No. Pennsylvania doesn't require severance. It's discretionary unless promised in contract or policy.

How much severance is normal?

Varies widely. Common formula is 1-4 weeks per year of service. Executives may get more.

Can I negotiate severance?

Yes. Most severance is negotiable. Employer wants your signature on release.

What happens if I don't sign?

You don't get severance. But you keep your legal claims. Evaluate what's more valuable.

How long do I have to decide?

If 40+, minimum 21 days (45 for group layoffs) plus 7-day revocation. Under 40, whatever employer offers.

Can I revoke after signing?

If 40+, yes within 7 days. Under 40, generally no unless agreement provides.

Related Topics

• Pennsylvania At-Will Employment
• Pennsylvania Age Discrimination
• Pennsylvania Non-Compete Agreements
• Pennsylvania Workplace Discrimination

Take Action

If offered a severance agreement:

1. Don't sign immediately
2. Take full time allowed
3. Read every word carefully
4. Identify what you're releasing
5. Assess potential claims
6. Consider negotiation points
7. Consult attorney if significant
8. Keep copies of everything

Your signature is valuable. Don't give it away.

Legal Disclaimer

This article provides general information about severance agreements in Pennsylvania and is not legal advice. Every situation is different. Severance negotiations can significantly affect your rights. For advice about your specific circumstances, consult a licensed Pennsylvania employment attorney.