Understanding What You’re Signing
When you’re presented with a severance agreement in New Jersey, it’s rarely “just paperwork.” Every clause represents a negotiation between your rights and your employer’s protection. Below, we explain the key terms and legal provisions you should understand before signing — including releases, confidentiality, non-disparagement, and more.
1. Release of Claims
A release clause is the heart of most severance agreements. In exchange for payment, you agree to waive your right to sue for issues such as discrimination, harassment, or wrongful termination.
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In New Jersey, releases must be “knowing and voluntary” under federal and state law.
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Workers age 40+ are protected by the Older Workers Benefit Protection Act (OWBPA), requiring 21 days to review and 7 days to revoke after signing.
2. Confidentiality Clauses
Most employers require confidentiality provisions to protect business information — and sometimes, to keep you from discussing the agreement itself.
However, overly broad clauses can:
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Prevent you from talking about workplace conditions
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Interfere with your ability to file a legal or EEOC complaint
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Conflict with New Jersey’s Whistleblower protections (CEPA)
Always have your attorney evaluate how far the clause extends.
3. Non-Disparagement Clauses
A non-disparagement clause prevents you from making negative statements about your employer. While fair in theory, it can be one-sided if:
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The company is not held to the same standard, or
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The definition of “disparagement” is vague.
Your lawyer can request mutual non-disparagement language to ensure balance.
Non-Compete & Non-Solicitation Clauses
Non-compete and non-solicitation restrictions are among the most contested provisions.
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A non-compete limits where and for whom you can work after leaving.
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A non-solicitation clause restricts your contact with clients or former coworkers.
Under New Jersey law, courts only enforce these clauses if they are reasonable in scope, geography, and duration.
If your severance includes one, you should have it reviewed by a New Jersey non-compete lawyer to see whether it’s enforceable.
Benefit Continuation & COBRA
Your severance package might include continued health or life insurance benefits.
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Federal COBRA law allows you to continue health coverage for a limited time.
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Employers sometimes pay part or all of the premiums as part of the severance offer.
Confirm whether the agreement specifies who pays and for how long — and whether benefits end if you get another job.
6. Stock Options & Deferred Compensation
For executives or long-term employees, stock, restricted shares, or deferred bonuses may be on the table.
Common issues:
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Vesting schedules that end upon termination
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Clauses that forfeit unvested options when signing a release
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Disputes about whether termination was “for cause”
These are negotiable and often worth significant financial value — a reason to seek legal review by Steinberg Law, LLC’s Employment Team.
7. Paid Leave, PTO, and Unused Vacation
In New Jersey, employers must pay for earned and unused PTO or vacation at the time of termination if company policy or past practice establishes a right to payment.
Your severance should specify:
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How much unused leave is included
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Whether payout is separate from the severance amount
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When payment will occur
Related: Business Law Counsel in NJ can assist with contract enforcement if payment is withheld.
8. Method and Timing of Payment
Always review:
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Whether payment is lump-sum or installment
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How long after signing you’ll be paid
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What happens if the company delays or fails to pay
Under New Jersey’s Wage Payment Law, employers must pay all due compensation within the next regular pay period following termination.
9. Governing Law, Venue, and Arbitration
Every agreement states which laws apply and where disputes must be resolved.
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New Jersey employees should ensure NJ law governs, not another state’s.
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Mandatory arbitration clauses can limit your ability to take disputes to court.
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Clauses specifying far-away venues (e.g., New York or Delaware) should be challenged.
10. Why Legal Review Matters
Severance agreements are drafted by employers — not to favor you.
A lawyer can:
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Identify unlawful or overly broad clauses
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Negotiate better financial terms or benefits
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Protect your right to future employment
At Steinberg Law, LLC we handle these reviews daily. Our Severance Agreement Lawyer in New Jersey can help ensure your agreement is fair, enforceable, and beneficial to your future.
Q: Can my employer force me to sign a non-compete as part of severance?
A: No — but they can condition payment on acceptance. You have the right to negotiate limits or removal.
Q: What if I already had a non-compete in my original contract?
A: The severance may reaffirm it. Have it reviewed for enforceability under NJ law.
Can I discuss my severance with my spouse or lawyer?
A: Yes. Confidentiality provisions cannot prevent consultation with legal or financial advisors.
Q: When will I get paid?
A: Typically within 30 days after signing and after the revocation period expires.
