The Clauses in Severance Agreements That Cause Problems Later 

The Real Risk Isn’t the Severance Check 

Let’s get one thing out of the way. The check you’re being offered is not the biggest part of the story. Most regret doesn’t show up while you’re holding the severance package. It shows up long after the money hits your account. 

At first, it feels like closure. You sign, you get paid, you move on. But then a few weeks or months pass, and something unexpected happens. A job offer falls through. A recruiter goes silent. You find out a coworker filed a claim that sounds just like your experience. That’s when it hits you. The fine print in your severance agreement wasn’t harmless. It was the whole deal. 

These agreements are packed with clauses that can quietly control what you say, where you work, and even how much money you have to return. It’s easy to focus only on the payout, but the long-term risks live in the language you skimmed. Our severance agreement attorneys at Horn Wright, LLP, are ready to break it all down for you. 

When Legal Review Becomes the Smart Move 

By now, after reading, “What a Severance Agreement Really Means for Your Rights,” you’ve seen how many moving parts are inside a single severance agreement. Identifying risky clauses is only the first step. 

The next question is when and how to push back. Timing matters. So does leverage. Sometimes a clause can be negotiated. Other times, you’re better off walking away. But you’ll only know that if you understand both the legal and practical impact. 

In the next article, we’ll dig into when legal review becomes not just smart, but necessary. If you’re asking, “Should You Have a Lawyer Review Your Severance Agreement?” we’ll help you answer that with confidence. 

The Release of Claims: What You Give Up in One Paragraph 

If your agreement has a release of claims clause, and almost all do, that section is doing heavy lifting. It’s short, but it’s sweeping. 

When you sign it, you’re giving up the right to sue your employer for just about anything that happened during your time there. That includes things like: 

• Discrimination or harassment 
• Retaliation for whistleblowing or reporting issues 
• Unpaid wages or commissions 
• Wrongful termination 

And here’s the real kicker. These releases usually apply to both known and unknown claims. Even if you learn something new later, the release still stands. 

Courts treat this language as final. You might think a new discovery would change things, but unless the agreement is proven invalid, your signature holds. That’s why this one paragraph can wipe out rights you didn’t even know you had. 

Confidentiality Clauses That Control What You Can Say 

Confidentiality sounds reasonable. After all, companies don’t want internal documents floating around. But the way these clauses are written often goes far beyond that. 

You might be restricted from talking about: 

• The terms of your severance 
• Why you were let go 
• Anything negative about your experience 
• Conversations with HR or leadership 

This can get in the way of job searches. You may hesitate to explain your departure honestly in interviews. It can even affect how you respond to references or background checks. 

Then there’s the social media risk. A casual tweet or post about being laid off could trigger a violation. Some agreements require repayment if the company decides you breached confidentiality. 

And no, they don’t always need proof. Some contracts let the employer decide whether they think a violation occurred. That puts a lot of power in their hands. 

Non-Disparagement Clauses That Silence Employees 

Non-disparagement sounds like a close cousin of confidentiality, but they’re not the same. Confidentiality restricts information. Non-disparagement restricts opinions. 

These clauses ban you from making any negative statements about the company, its leadership, or even other employees. And truth doesn’t always matter. 

You might think, “But I only told the truth.” That doesn’t mean you’re safe. Many non-disparagement clauses don’t make exceptions for accurate statements. They only care if your words could be seen as damaging. 

This has a chilling effect. You may avoid speaking openly in interviews, networking events, or even private conversations. The fear of violating the clause keeps people quiet, even when it hurts their chances of moving forward. 

Non-Compete and Non-Solicitation Clauses 

You’d expect to see non-competes in employment contracts. But many companies tuck them into severance agreements too, knowing that fewer people read those carefully. 

These clauses may block you from working for a competitor, even if the competitor is in a completely different region or role. Others prevent you from reaching out to former clients or coworkers, limiting your ability to rebuild your network. 

The enforceability of these clauses depends on where you live. Some states, like California, generally ban non-competes. Others allow them in certain situations. 

But here’s what catches people off guard. Just because a clause might be unenforceable doesn’t mean it won’t cause trouble. Employers can still try to enforce it. You may have to fight back in court, or worse, give up an opportunity to avoid the hassle. 

Repayment and Clawback Provisions 

Buried in many severance agreements is a clause that says, in effect, “If you mess up, we want the money back.” 

These are called clawback or repayment clauses. They list actions that can trigger a demand for repayment, such as: 

• Violating confidentiality 
• Badmouthing the company 
• Helping a legal investigation 
• Talking to the press 

Some clauses go further and give the company wide discretion to decide if a breach occurred. That creates risk. One vague sentence, one offhand comment, and you could be on the hook for thousands. 

And if the payment was made in installments, they can stop future payments too. You thought you had six months of financial cushion, and now it’s gone. 

Cooperation and Ongoing Obligations Clauses 

Just because you left the company doesn’t always mean you’re done helping them. 

Cooperation clauses require you to assist with internal matters, litigation, or investigations. You might be asked to: 

• Provide documents or emails 
• Answer questions about projects 
• Testify in future legal disputes 

These requests often come with no extra pay and can stretch on for years. Some agreements don’t limit the time frame at all. 

The problem isn’t helping, it’s the lack of clarity. These duties can be disruptive, especially if you’re working somewhere new or trying to move forward. And you usually can’t say no. 

Waivers Tied to Benefits, Bonuses, and Equity 

Many employees assume that severance is separate from things like health insurance, commissions, or stock options. But that’s not always true. 

Severance agreements often include language that waives your right to: 

• Continue certain benefits unless you pay full price under COBRA 
• Collect unpaid bonuses, even if they were earned before termination 
• Exercise stock options if deadlines are missed 

You might also waive access to profit sharing or long-term incentive plans without realizing it. These financial losses add up fast, especially if you were in a commission-heavy or senior role. 

Once you sign, these clauses are hard to reverse. The window to fix it is before you agree, not after. 

Arbitration and Venue Clauses That Limit Your Options 

When something goes wrong, most people assume they can take legal action if needed. Severance agreements often close that door. 

Arbitration clauses send any dispute into a private forum. You lose the right to a jury trial, and the process becomes much less transparent. 

Venue clauses do something similar. They say that any legal disputes must happen in a specific city or state, often where the company is based. That can mean traveling out of state or working with unfamiliar laws. 

Together, these clauses strip away flexibility and stack the odds in the company’s favor. They also discourage people from challenging bad agreements because the process feels so out of reach. 

Why One “Small” Clause Can Overrule Everything Else 

You might be thinking, “Sure, a few clauses are rough, but most of the agreement seemed fine.” That’s a risky way to look at it. 

Severance agreements work as a whole. Courts generally enforce them based on their plain language. That means one small clause tucked into page four can override everything you thought the deal was about. 

There’s no cherry-picking later. You can’t keep the money and erase the parts you didn’t like. Once it’s signed, the agreement stands. 

That’s why each sentence matters. Especially the ones that feel minor at first glance. 

The Damage Happens Quietly In Severance Agreements 

You won’t hear a loud alarm when a severance clause goes wrong. There won’t be a flashing red light when your words trigger a repayment demand. These things happen quietly, often when you least expect them. 

That’s why taking the time to read, reflect, and ask questions matters so much. It’s not about fear. It’s about protecting your future before you give it away. 

And once you understand what you’re really being asked to sign, you’re in a much stronger position to decide what comes next. 

How Horn Wright, LLP, Helps You Understand What You’re Signing 

At Horn Wright, LLP, we’ve helped employees from every background understand what their severance agreements actually say. Our team focuses on one thing, clarity. We explain confusing language in plain English, identify where your rights may be at risk, and give you the insight to decide what’s best for your future.  

If you’re unsure about a clause, a condition, or the entire agreement, we’re here to help you sort through it, one line at a time.