When employers offer severance agreements, they often create pressure to sign quickly. Some will tell you the offer expires in a few days. Others will suggest that hesitating looks bad. This pressure is a tacit and not a law; employers want you to sign before you fully understand what you’re giving up.
Federal law protects many employees by requiring specific review periods before signing severance agreements. At 1818, we help employees across Chicago and throughout Illinois review, negotiate, and understand their severance agreements. Before you sign away your legal rights, you should know exactly how much time you have and what’s at stake.
Federal Law Protects Employees Over 40
If you’re 40 years old or older, you have significant legal protections under the Older Workers Benefit Protection Act (OWBPA), which is part of the Age Discrimination in Employment Act (ADEA).
Here’s what the law requires:
Individual Terminations: If you’re over 40 and being terminated as an individual (not part of a group layoff), your employer must give you at least 21 days to review and consider the severance agreement before signing it.
Group Layoffs or Reductions in Force: If you’re part of a group termination or layoff and you’re over 40, your employer must give you at least 45 days to review the agreement.
These time periods are mandatory. Your employer cannot legally pressure you to sign before the minimum time period expires. If they do, the waiver of your age discrimination claims may not be valid.
The 7-Day Revocation Period
Even after you sign a severance agreement, federal law gives you a 7-day “cooling off” period to change your mind if you’re over 40.
This means that after you sign, you have 7 days to revoke your signature and walk away from the deal. The severance agreement doesn’t become binding and enforceable until those 7 days have passed.
This revocation period cannot be waived or shortened. Even if you tell your employer you don’t need it, the law still gives you those 7 days.
The clock starts running the day after you sign the agreement. If you decide to revoke, you must do so in writing before the 7-day period expires.
What About Employees Under 40?
Unfortunately, if you’re under 40, federal law doesn’t require your employer to give you any specific amount of time to review a severance agreement.
Courts have found that employers can give employees under 40 as little as one day to review and sign severance agreements. Some employers give a few days or a week, but there’s no legal minimum.
That said, most employers offer the same 21-day review period to all employees regardless of age, simply to make their severance process consistent and easier to administer.
Even if you’re under 40, you should take your time to review the agreement carefully. Don’t let your employer pressure you into signing immediately.
You’re Not Required to Sign
This is important: Employers are not required to offer severance pay in Illinois. Unless you have an employment contract or collective bargaining agreement that guarantees severance, your employer doesn’t owe you anything beyond your final paycheck.
But that also means you’re not required to sign the severance agreement. It’s a negotiation. Your employer is offering you money in exchange for giving up your legal rights. You have every right to reject the offer, negotiate for better terms, or walk away entirely.
If you don’t sign, you won’t get the severance pay, but you’ll keep your right to sue the employer for any legal violations.
What You’re Giving Up When You Sign
Severance agreements are contracts. Once you sign, you’re legally bound by the terms. In most cases, you’re agreeing to give up important legal rights, including:
- The right to sue for discrimination based on age, race, sex, disability, or other protected characteristics under federal and state law
- The right to sue for wrongful termination, retaliation, or harassment
- The right to file claims for unpaid wages, overtime, commissions, or bonuses
- The right to challenge violations of the Illinois Human Rights Act
Many severance agreements also include restrictive clauses like:
- Non-compete agreements that prevent you from working for competitors
- Non-disparagement clauses that prevent you from saying anything negative about the company
- Confidentiality provisions that restrict what you can say about your employment or termination
These restrictions can significantly impact your ability to find new work or speak openly about your experience.
What You Should Do Before Signing
Before you sign any severance agreement, take these steps:
1. Read Every Word
Severance agreements are written by the employer’s lawyers to protect the company, not you. Read the entire document carefully. Make sure you understand what you’re agreeing to and what you’re giving up.
2. Calculate What You’re Owed
Make sure the severance pay amount is fair. Consider factors like:
- Your length of employment (many companies offer one week of pay per year of service)
- Industry standards for your position
- Any unpaid wages, commissions, bonuses, or vacation time you’re owed
- The value of any legal claims you may have
3. Review Non-Compete and Restrictive Clauses
If the agreement includes a non-compete clause, evaluate whether it’s reasonable. Under the Illinois Freedom to Work Act, non-compete agreements are limited, especially for lower-earning employees.
Ask yourself: Will this prevent me from working in my field? Will it make it harder to find a new job?
4. Consider Your Legal Claims
If you believe your termination was illegal, for example, if you were fired for reporting harassment, discrimination, or illegal activity, signing a severance agreement may not be in your best interest. The severance payment might be far less than what you could recover in a lawsuit.
5. Negotiate
Severance agreements are often negotiable. You can ask for:
- More money
- Extended health insurance coverage
- A neutral or positive reference letter
- Removal of restrictive clauses like non-compete or non-disparagement terms
- Outplacement services or career counseling
The worst they can say is no.
6. Talk to a Lawyer
Before you sign, consult with an experienced employment lawyer. At 1818, we review severance agreements every day. We can help you understand what you’re giving up, whether the offer is fair, and how to negotiate better terms.
What Happens If You Don’t Sign?
If you choose not to sign the severance agreement, you won’t receive the severance pay. However, your employer must still pay you:
- All earned wages through your last day of work
- Accrued vacation time (if required under Illinois law)
- Earned bonuses or commissions owed to you
Under the Illinois Wage Payment and Collection Act, your final paycheck must be paid by your next regularly scheduled payday.
You’ll also keep your legal rights, which means you can file a claim with the Equal Employment Opportunity Commission (EEOC) or the Illinois Department of Human Rights (IDHR) if you believe you were discriminated against or wrongfully terminated.
Can You Change Your Mind After Signing?
If you’re over 40, you have 7 days after signing to revoke the agreement.
If you’re under 40, changing your mind is much harder. Once the agreement is signed, it’s generally binding and enforceable. However, if your employer violated the law, for example, by coercing you to sign or failing to follow required procedures, the agreement may be challenged.
Why You Should Talk to a Lawyer First
Severance agreements are one-sided contracts written by your employer’s legal team. They’re designed to protect the company, not you. Having your own lawyer review the agreement levels the playing field.
At 1818, we bring a unique advantage to employment cases. Founder Jordan Matyas has spent decades working with government agencies, including the Illinois Legislature and Chicago’s Law Department. That experience gives us insight into how Illinois employment law works.
We can help you:
- Understand what you’re signing and what rights you’re giving up
- Evaluate whether the offer is fair based on your situation
- Negotiate better terms, including more money, better benefits, or fewer restrictions
- Identify potential legal claims that might be worth more than the severance offer
Don’t Rush, Take Your Time.
If you’re being pressured to sign a severance agreement immediately, that’s a warning sign. Federal law gives employees over 40 at least 21 days to review the agreement for a reason; these are important decisions that deserve careful consideration.
Even if you’re under 40 and the law doesn’t require a specific review period, you should still take the time you need to understand what you’re signing.
Severance agreements affect your financial security, your legal rights, and your future career. Don’t make this decision alone.
Get Legal Advice Before You Sign
At 1818 Litigation Attorneys, we help employees across Chicago and throughout Illinois protect their rights during terminations and layoffs. We review severance agreements, negotiate better terms, and fight for fair treatment.
Call or schedule a confidential consultation online today.
You have more power than you think. Let us help you use it.
