As employment lawyers serving clients throughout the Chicago area, we’ve reviewed hundreds of severance agreements, and we know how tempting it is to sign quickly. You’re likely facing a difficult situation: your employment just ended, you’re worried about bills, and a severance package might seem like a lifeline. But before you sign anything, stop and read carefully.
Severance agreements are legal contracts, and once you sign, you could be giving up important rights under both federal and Illinois law. You owe it to yourself to make an informed decision.
Severance agreements are often written to favor the employer.
While some offer fair compensation for your cooperation and release of claims, others may attempt to limit your legal options, waive your rights, or impose unnecessary restrictions. That’s why we always recommend reviewing these agreements with a qualified employment attorney before signing. What’s written in the fine print matters.
A severance agreement is a legal contract between you and your former employer. In most cases, it offers you compensation in exchange for releasing the company from liability. That release usually includes giving up the right to sue your employer under key federal and state laws, like Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), and the Illinois Human Rights Act.
You may also be waiving rights under the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and state laws involving unpaid wages or overtime. Once you sign, you may be permanently barred from bringing legal claims related to wrongful termination, harassment, discrimination, or retaliation—even if you didn’t know your rights were violated at the time.
Under the Illinois Human Rights Act (775 ILCS 5/1-101 et seq.), employees have protection against discrimination based on race, gender, age, disability, religion, and other protected characteristics. If you were fired or laid off for a discriminatory reason, signing a severance agreement with a release clause could prevent you from pursuing a legal claim.
Illinois also enforces strict rules under the Illinois Wage Payment and Collection Act (820 ILCS 115/1 et seq.), which ensures that employees receive all earned wages, bonuses, and accrued vacation time. Some severance agreements may attempt to bundle unpaid compensation with severance pay to discourage separate claims.
If you are 40 or older, your severance agreement must comply with the Older Workers Benefit Protection Act (OWBPA), which is part of the ADEA. Federal law requires that any release of age discrimination claims:
If your employer fails to follow these rules, the waiver of your rights may be invalid under 29 U.S. Code § 626(f).
If you’re part of a group layoff, the agreement may also need to comply with the Worker Adjustment and Retraining Notification (WARN) Act, which requires advance notice for large-scale layoffs. A severance package may try to settle potential WARN Act claims, which is why it’s essential to understand the full context of your termination.
Here are some common rights employees unknowingly waive when signing severance agreements:
These agreements may also contain non-disparagement clauses, confidentiality provisions, or cooperation clauses that restrict what you can say or do after you leave the company.
Employers are not required to offer severance, and you’re not required to accept it. That means you have room to negotiate, especially if your termination involved questionable conduct. We can often help clients secure better terms, additional pay, or modifications to restrictive clauses. Once signed, though, most agreements are final.
We review every word of the agreement to make sure you’re not giving up more than what’s fair. We also examine the circumstances of your termination to determine if legal claims exist and whether signing the agreement is in your best interest.
There is no law requiring severance pay in Illinois unless it’s outlined in an employment contract or company policy. That said, many employers offer one or two weeks’ pay for every year of service. What’s considered fair depends on your position, the reason for termination, and whether you’re giving up valuable legal rights. If you’re being asked to sign a release, the compensation should reflect that.
In Illinois, you may still qualify for unemployment benefits even if you receive severance. However, if the severance pay is issued as continued salary over time (also called salary continuation), it may delay your benefits. It’s important to clarify how severance will be paid and how it’s reported to the Illinois Department of Employment Security (IDES).
If you’ve already signed the agreement, your options may be limited, but not always. If you were over 40 and the employer didn’t follow OWBPA guidelines, or if you were pressured into signing without time to review, the agreement may be challenged. Contact an attorney immediately to review your situation and see if the waiver is enforceable.
Yes, and we recommend doing so. Severance agreements are not take-it-or-leave-it in many cases. We often negotiate for more severance pay, continued health insurance, a neutral reference, or the removal of restrictive clauses like non-compete agreements. Employers want closure, but they also want your signature, so you have leverage.
Under Illinois law, non-compete clauses are enforceable only if they meet specific requirements.
Recent amendments to the Illinois Freedom to Work Act (820 ILCS 90) have limited their use, especially for lower-earning employees. We evaluate these clauses carefully and may be able to modify or remove them as part of the severance negotiation.
We strongly recommend it. Employers typically have legal teams draft these agreements. You should have someone on your side who understands both federal and Illinois law and can advise you about the legal and financial impact. An attorney can also help protect you from unknowingly waiving your rights.
If the agreement includes a release of claims, you are likely waiving your right to file a lawsuit. However, in some cases, you may still file a charge with the EEOC or Illinois Department of Human Rights (IDHR). These rights depend on the language of the agreement and how it was executed. That’s why it’s important to understand what you’re signing.
No. You cannot be forced to sign. However, employers may condition severance pay on your willingness to accept the terms. If the offer seems unfair or if you have possible legal claims, you are under no obligation to agree. You have the right to review, negotiate, or reject the offer entirely.
At Law Office of Michael T. Smith & Associates, we’ve helped countless employees throughout Chicago protect their rights when faced with severance agreements. We don’t just review your contract—we help you understand what it means, what’s at stake, and whether you should push for more.
Before signing away your rights, get legal clarity. To receive your free consultation, contact our Chicago employment law lawyer at the Law Office of Michael T. Smith & Associates at (847) 450-1103. We represent clients throughout Chicago from our office in Lisle, Illinois, and we’re ready to stand up for your rights.
We're ready to listen. Get started now by filling out the attached form.
