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Massachusetts is an at-will employment state, which means an employer can generally end the relationship at any time, for almost any reason. When a termination happens, many employers offer a severance agreement rather than simply letting the employee go. It is important to understand that a severance agreement is a contract, and like any contract, it is negotiable and worth reviewing carefully before signing.

What a Severance Agreement Typically Includes

Most severance agreements in Massachusetts cover a similar set of terms. These usually include the amount and timing of severance pay, whether health insurance or other benefits will continue and for how long, a release of legal claims against the employer, and any restrictions on what the employee can say or do after leaving. Some agreements also include non-compete or non-solicitation clauses, confidentiality provisions, and language addressing the return of company property.

Consideration Period for Employees 40 and Older

If you are 40 or older, federal law under the Older Workers Benefit Protection Act requires your employer to give you at least 21 days to review the agreement before signing, or 45 days if the termination is part of a larger group layoff. You must also be given at least 7 days after signing to revoke your acceptance. These timelines cannot be shortened, and an agreement that fails to include them may not hold up if the age-related release is ever challenged.

Massachusetts-Specific Considerations

Massachusetts has its own rules that can affect what belongs in a severance agreement, particularly around restrictive covenants. Under the Massachusetts Noncompetition Agreement Act, a non-compete clause generally cannot last longer than 12 months and must be supported by fair consideration, which in many cases means continued pay during the restricted period. If your severance agreement includes a non-compete provision, it is worth confirming that it meets these requirements, since an unenforceable clause may not actually restrict you the way the language suggests.

Massachusetts courts have also shown a willingness to scrutinize severance agreements that appear one-sided or that were signed without a fair opportunity to review the terms. An agreement does not have to be complicated to raise concerns. Sometimes the issue is simply that an employee was rushed, or was not told they could take the document to an employment lawyer before deciding.

How Severance Pay Can Affect Unemployment Benefits

One detail that often catches employees off guard is how severance pay interacts with unemployment benefits in Massachusetts. Under state law, severance pay is generally treated as remuneration, which typically means you are not considered unemployed for the weeks that payment covers, and benefits may be delayed or reduced during that period. However, this is not always the case. 

When severance is paid specifically in exchange for releasing legal claims against the employer, rather than as a straightforward continuation of pay for past service, it has, in some cases, been treated differently and may not count against unemployment eligibility the same way.

This distinction depends heavily on how the severance agreement is structured and worded, including whether the payment is framed as a lump sum, spread out over specific weeks, or conditioned on signing a release. It is not something most employees can evaluate just by reading the document, and the difference can affect real money during an already difficult transition. 

If you are relying on unemployment benefits to bridge the gap after a termination, this is worth raising directly with an employment attorney before you sign, and it is also worth reporting any severance payment accurately to the Massachusetts Department of Unemployment Assistance, regardless of how the agreement is structured.

A Note on Severance and Discrimination Claims

Sometimes a termination and a severance offer come at the same time an employee suspects something else was going on, such as discrimination. Perhaps you were let go and handed a severance agreement, but you believe age, disability, sex, or another protected characteristic played a role in the decision. An employment discrimination attorney can help you evaluate whether that suspicion has legal weight. 

If a severance package has already been offered, Working Solutions Law Firm has severance agreement lawyers on staff who focus specifically on negotiating higher severance pay in situations involving potential employment discrimination claims.

What to Watch For Before You Sign

A few things are worth double-checking before signing any severance agreement: 

  • Look closely at how the release of claims is worded, since broad language can waive rights you may not realize you are giving up. 
  • Check whether any non-compete or non-solicitation clause is reasonable in length and scope. 
  • Confirm that the severance pay and benefits continuation are clearly spelled out, including tax treatment. 
  • If there is a deadline pressuring you to sign quickly, understand that you generally have the right to take the time the law allows.

A consultation with an employment attorney is always recommended before signing a severance agreement. Agreements can contain conditions that meaningfully affect your rights and that are not always obvious to someone without legal training, including how a release interacts with claims you may not have even considered yet.

Contacting Working Solutions Law Firm for a case consultation can help you determine whether your severance agreement adequately protects your interests and whether you need the assistance of an employment attorney. If you would prefer a second opinion or additional resources, there are other firms and organizations that can also provide guidance on severance agreements and employment rights.