What is a release of claims in severance?

Counteroffer · Answers · severance Source: https://trycounteroffer.com/answers/release-of-claims-explained

Short answer: A release of claims is the language in a severance agreement where you waive your right to sue the employer for things that happened during employment. The release is the main thing the company is buying with the severance payment. Standard releases waive all known and unknown claims, but federal and state law require specific carve-outs (SEC whistleblower, ADEA, NLRA, unemployment) that cannot legally be waived. A well-negotiated release narrows the waiver and explicitly preserves carve-outs.

What a release does

A release is the part of a severance agreement where you give up the right to bring legal claims against the employer for things that happened during your employment. Without a release, you could sue for any number of employment-related claims after separation: discrimination, retaliation, unpaid wages, breach of contract, harassment, and so on.

The employer pays severance in exchange for the release. Without the release, the employer has no reason to pay anything beyond what's already owed (PTO payout, earned commissions, etc.).

This is why severance and release language go together. The severance is the consideration; the release is what they're buying with it.

The standard structure

A typical release section reads something like:

Employee hereby releases and forever discharges Company, its affiliates, officers, directors, employees, and agents from any and all claims, demands, actions, causes of action, suits, damages, and liabilities of any kind, known or unknown, arising at any time prior to and including the effective date of this Agreement.

This language is broad on purpose. It tries to waive everything you could possibly sue for, even claims you don't know you have.

In addition to the general release, most agreements include specific waivers of particular categories:

All claims under federal employment laws (Title VII, FLSA, FMLA, ADA, ADEA, etc.)
All claims under state employment laws (state discrimination statutes, wage and hour laws)
All claims under common law (breach of contract, tort claims like defamation)
All claims under company policies and benefit plans

The breadth is intentional. The company wants to eliminate as much future risk as possible.

Required carve-outs

Federal and state law require certain rights to be preserved regardless of release language:

Cannot be waived under federal law:

Right to file a charge with the EEOC (you can waive monetary recovery from a charge in most contexts, but not the right to file)
SEC whistleblower rights under Dodd-Frank Section 922
CFTC whistleblower rights
Sarbanes-Oxley whistleblower claims (18 USC § 1514A)
NLRA Section 7 rights (concerted activity, discussion of wages and conditions)
Defend Trade Secrets Act immunity for protected disclosures (18 USC § 1833(b))
Workers' compensation claims (in most states, require state agency approval)
Unemployment insurance eligibility

Often cannot be waived under state law:

State equivalents to ADEA
Statutory PTO payout (CA, MA, others)
State whistleblower protections
Some workers' compensation claims

ADEA-specific:

For employees 40 or older, the OWBPA requires specific procedural compliance for the release to be valid as to age claims (see What is ADEA?)

A release that doesn't explicitly preserve these rights is still partially unenforceable as to those rights, because the law overrides the contract language. But explicit carve-outs make the agreement cleaner and reduce ambiguity.

Things you should add

When negotiating a release, request the following explicit carve-out language:

Nothing in this Agreement waives, releases, or limits Employee's right to: (i) file a charge or complaint with, provide information to, or participate in an investigation or proceeding conducted by the EEOC, NLRB, SEC, CFTC, OSHA, or any other federal, state, or local agency; (ii) receive an award from the SEC, CFTC, or other government agency for information provided; (iii) report unlawful conduct as protected by federal, state, or local law; (iv) discuss the terms of this Agreement with legal counsel, family members, tax advisors, or the EEOC; (v) participate in any proceeding required by law.

Also request:

A mutual release (the company releases you from any claims they might have against you)
Explicit preservation of vested benefits and equity rights
Carve-out for indemnification rights (especially for officers and directors)

Things to watch for

Release of future claims: Sometimes agreements try to release claims arising after the effective date. This is generally unenforceable in employment contexts and should be removed.
Confidentiality of the agreement itself: Some agreements prohibit you from discussing the terms with anyone. This may conflict with state laws (CA, NY) and NLRB position.
Liquidated damages for breach: Heavy financial penalties for any breach of the release. Push to narrow these to material breaches with significant carve-outs.
Cooperation clauses bundled into the release: Sometimes drafted to extend the company's leverage indefinitely. Cap hours and require reimbursement.

What to do next

Release language is one of the most consequential parts of any severance agreement. If you want a delivered analysis of your specific release, including identification of every required carve-out and recommended additions, we deliver one in 24 hours for $199. See Severance Review.

Get your contract reviewed

If you want a delivered review of your specific document with cited authority and counter language, see https://trycounteroffer.com/severance.

Last updated: Sun May 31 2026 00:00:00 GMT+0000 (Coordinated Universal Time)

Counteroffer is a contract analysis service, not a law firm. This page is informational, not legal advice.