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Severance Agreement Review in Michigan: What a Lawyer Looks for First
You didn't see it coming, or maybe you did but hoped it wouldn't happen. Either way, there you are — cleaning out your desk, handing in your badge, and someone from HR slides a document across the table with a deadline attached to it. Sign here, and we'll give you some money on the way out.
Most people sign. They're anxious, they need the income, and the whole situation feels too uncomfortable to push back on. What they don't realize is that the agreement they're holding was written by the company's lawyers, reviewed by the company's lawyers, and designed to protect the company. Nobody on the employer's side was thinking about whether the deal was fair to the employee.
Scott Batey has reviewed hundreds of these agreements over nearly 30 years of practicing employment law in Michigan. The first thing he'll tell you: severance agreements are negotiable far more often than employees are led to believe, and what you're giving up is almost always worth more than what's spelled out in the offer. The question is whether you know that before you sign.
The Release of Claims: The Most Important Paragraph You'll Ever Sign
Every severance agreement contains a release of claims. This is the section that matters most, and it's the first place Scott looks.
In plain terms, a release of claims is your agreement to give up your right to sue your employer — for anything that happened up to the date you sign. That typically includes claims under federal law and Michigan state law:
- Title VII of the Civil Rights Act (discrimination based on race, sex, religion, national origin)
- The Age Discrimination in Employment Act (ADEA) (age discrimination for workers 40 and older)
- The Americans with Disabilities Act (ADA)
- The Family and Medical Leave Act (FMLA)
- Michigan's Elliott-Larsen Civil Rights Act (ELCRA)
- The Persons with Disabilities Civil Rights Act (PWDCRA)
- The Whistleblowers' Protection Act (WPA)
What makes this paragraph so significant is its permanence. Once you sign and the revocation period passes, those claims are gone. If you later discover that your termination was actually driven by age discrimination or that you were owed wages you never received, you generally cannot go back and pursue it.
The Money: Is What They're Offering Actually Fair?
Many employees assume the severance number is fixed, a standard formula tied to years of service, take it or leave it. That assumption benefits the employer.
Whether an offer is fair depends on several factors:
- Length of employment and what a reasonable severance formula would look like for someone in that role
- The strength of any underlying legal claims — if the employer has exposure, that affects leverage significantly
- Salary, bonuses, commissions, and equity that might factor into the overall calculation
- The circumstances of the termination itself, including whether there are signs of discrimination or retaliation
The Deadline and the 21/45-Day Rule
Employers frequently create urgency around severance agreements. "We need this back by Friday" is a common pressure tactic, and it works because most employees don't know what the law actually requires.
Protections for Employees 40 and Older
Federal law under the Older Workers Benefit Protection Act (OWBPA), which works alongside the ADEA, gives employees 40 and older specific rights:
- 21 days to consider the agreement in an individual termination situation
- 45 days to consider the agreement when the termination is part of a group layoff or reduction in force
- 7 days to revoke the agreement after signing, regardless of which timeline applies
Employees Under 40
Michigan employees under 40 have no statutory minimum review period, but that doesn't mean they should rush. Any employee, regardless of age, benefits from taking the time to have an attorney review the agreement before signing. Scott can often turn around a review quickly, and the deadline is rarely as firm as it's presented.
Confidentiality and Non-Disparagement Clauses
Most severance agreements include confidentiality and non-disparagement provisions. Employees often skim past these, but they carry real-world consequences.
Here's what to understand:
- Confidentiality clauses typically prohibit you from disclosing the terms of the agreement, including the amount paid, to almost anyone outside of your spouse, attorney, and tax advisor
- Non-disparagement clauses go further, restricting what you can say about the company, its leadership, or the circumstances of your departure
- These clauses are often written broadly, which means a passing comment on social media or a conversation with a former colleague could technically put you in violation
- Some agreements include a mutual non-disparagement provision that also restricts what the employer can say about you, which is worth asking for if it isn't already there
There are also important carve-outs to look for: rights preserved under the National Labor Relations Act, the ability to cooperate with government investigations, and protections for truthful statements made in legal proceedings. Whether those carve-outs are present and how they're worded matters.
Noncompete and Non-Solicitation Provisions
Not every severance agreement contains a noncompete, but when one is included, Scott reviews it carefully. A noncompete buried in a severance agreement is easy to overlook and hard to undo after signing.
Key issues to evaluate:
- Geographic scope: Is the restriction limited to a reasonable area, or does it purport to cover the entire state or country?
- Duration: Michigan courts have found noncompetes unreasonable when the time period is excessive relative to the employer's legitimate business interest
- Scope of prohibited activity: Does the restriction actually cover what you do for a living, or is it written so broadly that it limits your ability to work in your field at all?
- Non-solicitation clauses: Restrictions on contacting former clients or colleagues can be just as limiting as a noncompete, and they deserve the same scrutiny
Michigan does enforce noncompete agreements, but enforceability depends heavily on the specific language and circumstances. Signing a severance agreement with an overbroad noncompete is a mistake that can follow you for years.
COBRA, Benefits, and What Happens to the Rest of Your Compensation
Severance agreements sometimes address benefits and sometimes go quiet on them entirely. Either way, you need to know where things stand.
Items Scott looks for in this section:
- Health insurance continuation: Does the employer agree to pay any portion of COBRA premiums, and for how long?
- Accrued PTO: Michigan does not require employers to pay out unused vacation upon termination unless company policy or a contract says otherwise — so this is worth confirming explicitly
- Unpaid bonuses and commissions: If you were on track for a performance bonus or have unpaid commissions, the agreement may address — or quietly extinguish — those rights
- Equity and stock options: Vesting schedules, exercise windows, and post-termination equity rights can involve significant money; these deserve a careful read
- Reference policy: The agreement may specify what the employer will say — or won't say — when prospective employers call
Cooperation Clauses: The Obligation That Doesn't End When You Leave
Many severance agreements require the former employee to cooperate with the company in future litigation, investigations, or regulatory proceedings. This obligation can extend for years after your employment ends.
The practical concern:
- You may be required to give testimony, produce documents, or participate in interviews at the company's request
- The time and disruption this causes can be significant, particularly if litigation drags on
- The scope of "cooperation" is often written broadly, and it may not include any compensation for your time or reimbursement for expenses
This clause isn't always a dealbreaker, but the scope should be reasonable and any requirement to testify should at minimum guarantee that you won't be left to cover your own legal costs if you need counsel for those proceedings.
Sign When You Know What You're Signing
Signing a severance agreement is a permanent legal decision. Once the revocation window closes, the claims you released are gone. There is no taking it back because you later learned something you didn't know at the time, and there is no renegotiating once you've already accepted the terms.
Most reviews don't take long. Some agreements are genuinely reasonable, and Scott will tell you that. Some have real issues that are worth addressing. A few have claims that significantly exceed what's on the table. You won't know which category you're in until someone with experience takes a look.
Talk to Scott Before You Sign
If you've been handed a severance agreement, the most important step you can take is getting it reviewed before the deadline. A free consultation with Scott Batey won't cost you anything, and it gives you a clear understanding of what you're dealing with before you make a decision you can't undo.
Michigan employees have rights, and those rights have real value. Scott can help you figure out what yours are worth.