Severance Agreement Review Michigan: Protect Your Rights Before You Sign

Losing a job can be overwhelming. You may be thinking about your finances, your family, and what comes next. Then your employer hands you a severance agreement and asks you to sign it quickly. At first glance, it may seem like a simple exchange. You receive compensation in return for signing a few documents. In reality, the agreement can affect your legal rights for years to come.

Many Michigan employees do not realize they can ask questions, negotiate terms, or have an attorney review the agreement before signing. What looks like standard paperwork may contain language that limits your ability to bring legal claims, work for another employer, or even discuss what happened. Taking the time to understand every provision can help you avoid costly mistakes and make informed decisions about your future.

What Is a Severance Agreement?

A severance agreement is a legal contract between an employer and an employee whose employment is ending. In exchange for compensation or other benefits, the employee usually agrees to certain conditions. Those conditions often include releasing legal claims against the employer.

What Severance Pay Usually Includes

A severance package can include much more than a single payment. The exact terms depend on your employer, your position, and your employment agreement.

Common benefits include:

• One lump sum payment
• Salary continuation for a period of time
• Payment for unused vacation or paid time off
• Continued health insurance benefits
• COBRA assistance
• Bonuses or commissions
• Outplacement or career transition services

Why Employers Offer Severance Packages

Many people assume employers offer severance because they are legally required to do so. In most situations, that is not the case.

Instead, employers often provide severance for business reasons. These may include:

• Reducing the risk of future lawsuits
• Creating a smoother separation
• Protecting confidential business information
• Maintaining positive employee relations
• Meeting contractual obligations

Is Severance Required Under Michigan Law?

Michigan law generally does not require employers to provide severance pay. Unless an employment contract, union agreement, company policy, or executive agreement promises severance, employers are usually not obligated to offer it.

However, once an employer offers a severance agreement, both sides have the opportunity to negotiate its terms before signing.

Why You Should Never Sign Immediately

What Happens Once You Sign

Once you sign a severance agreement, it generally becomes legally binding.

That means you may no longer have the ability to challenge certain employment decisions or pursue legal claims that existed before signing. Even if you later discover additional information, reversing the agreement can be extremely difficult.

Rights You May Be Giving Up

Many employees are surprised by the number of rights included in a typical release.

Depending on the agreement, you may be giving up the right to pursue claims involving:

• Wrongful termination
• Employment discrimination
• Retaliation
• Harassment
• Wage disputes
• Certain contract claims

The Michigan Severance Agreement Review Playbook

Gather Every Document From Your Employer

Start by collecting every document related to your employment and separation.

This may include:

• Your severance agreement
• Employment contract
• Employee handbook
• Performance reviews
• Bonus plans
• Commission agreements
• Noncompete agreements
• Termination letter

Identify Every Promise the Employer Is Making

Your employer is asking you to give up certain rights. In return, they should be providing something of value.

Review exactly what the employer is offering, including:

• Severance pay
• Health insurance benefits
• PTO payments
• Bonus eligibility
• Stock or equity treatment
• Reference agreements

Look for Every Right You Are Being Asked to Waive

This step often reveals the most important provisions in the agreement.

Pay close attention to language involving:

• Legal claims
• Confidentiality
• Non disparagement
• Noncompete obligations
• Future lawsuits
• Cooperation requirements

Compare the Value of the Severance to What You May Be Giving Up

Not every severance package is fair.

Ask yourself questions such as:

• Does the compensation reflect my years of service?
• Am I giving up valuable legal claims?
• Does the agreement limit future career opportunities?
• Would negotiation improve these terms?

Determine Whether Negotiation Makes Sense

Many employees assume severance agreements cannot be changed. That is not always true.

Depending on the circumstances, employers may be willing to negotiate:

• Higher severance payments
• Additional health insurance coverage
• Better reference language
• Removal of restrictive provisions
• Modified confidentiality terms
• Changes to noncompete language

What an Employment Attorney Looks For During a Review

Release of Discrimination and Retaliation Claims

Many severance agreements require employees to release legal claims involving discrimination, retaliation, harassment, or wrongful termination.

Before signing, it is important to understand:

• Which claims are being released
• Whether any claims remain protected
• Whether the release is broader than necessary

Noncompete and Nonsolicitation Provisions

Some agreements limit where you can work after leaving your employer.

A review should examine:

• Geographic restrictions
• Time limitations
• Industry restrictions
• Customer solicitation provisions
• Employee solicitation restrictions

Confidentiality Clauses

Many employers require employees to keep the agreement confidential.

A review should determine:

• What information must remain confidential
• Whether family members may be told
• Whether legal or tax advisors may discuss the agreement
• What penalties apply for violations

Non Disparagement Language

These provisions often prevent employees from making negative statements about the company.

An attorney will evaluate:

• Whether the language is balanced
• Whether both parties have the same obligations
• How broadly the restriction is written

Cooperation Requirements

Some agreements require former employees to assist the employer after termination.

Important questions include:

• How long does the obligation last?
• Will you be compensated for your time?
• Does the agreement reimburse travel expenses?
• How much cooperation is required?

Return of Company Property

This section identifies what must be returned before severance benefits are paid.

Common examples include:

• Laptops
• Cell phones
• Company documents
• Access cards
• Electronic files

Tax Implications

Severance payments are generally taxable.

An attorney can help identify issues involving:

• Payment timing
• Withholding requirements
• Deferred compensation concerns
• Coordination with your tax professional

Benefit Continuation

Health insurance is often one of the biggest concerns after losing a job.

A review should clarify:

• How long benefits continue
• Whether COBRA assistance is included
• When coverage ends
• What costs you may be responsible for

Stock Options, Commissions, and Bonuses

Compensation plans often contain separate rules that affect your rights after termination.

Review whether the agreement addresses:

• Unpaid commissions
• Annual bonuses
• Stock options
• Restricted stock
• Profit sharing

References and Future Employment Language

A positive reference can make a significant difference during your job search.

Whenever possible, review whether the agreement includes:

• A neutral reference policy
• Approved reference language
• Employment verification procedures
• Confirmation of your job title and dates of employment

Michigan Severance Negotiation Playbook

Can Severance Agreements Actually Be Negotiated?

Yes. While every employer has different policies, many severance agreements are negotiable.

Factors that may influence negotiations include:

• Your position within the company
• Your length of employment
• The reason for your separation
• Whether you have potential legal claims
• The employer's desire to avoid future disputes

Financial Terms Worth Requesting

The amount offered in an initial severance package is not always the highest amount available.

Depending on your circumstances, you may be able to negotiate:

• Additional weeks or months of severance pay
• Payment of earned bonuses
• Unpaid commissions
• Extended salary continuation
• Payment for unused paid time off
• Employer contributions toward COBRA premiums
• Reimbursement for job placement services

Non Financial Terms Worth Negotiating

Money is only one part of a severance agreement. Some of the most valuable changes involve terms that affect your future career.

These may include:

• A positive or neutral employment reference
• Removal of a noncompete provision
• Narrower confidentiality requirements
• Changes to non disparagement language
• More favorable payment schedules
• Clarification of stock option or equity rights
• Mutual confidentiality obligations

Protect Your Future Before You Sign

A severance agreement represents more than the end of a job. It can shape your financial security, career opportunities, and legal rights for years to come. While the agreement may appear routine, every provision deserves careful attention before you decide whether to accept it.

Taking time to understand the document is an investment in your future. A careful review can identify opportunities for negotiation, explain complex legal language, and help you make a confident decision that aligns with your goals.

Speak With Batey Law Before You Make Your Decision

If you have received a severance agreement, you do not have to navigate it alone. Attorney Scott Batey has spent decades representing Michigan employees facing difficult workplace decisions. He understands that every situation is personal, and every agreement deserves careful attention. His focus is helping employees protect their rights while pursuing practical, effective solutions.

Whether you are considering signing, negotiating, or simply want to understand your options, an experienced review can provide clarity before you make a decision.

Contact Batey Law Firm, PLLC

30200 Telegraph Rd., Suite 400
Bingham Farms, MI 48025

Phone: (248) 540-6800

Website: www.bateylaw.com