Everything You Need to Know About Severance Pay
Severance pay is a topic many employees don’t think about until they’re facing a layoff or job termination. While it’s not always guaranteed, severance can offer financial support and peace of mind as you transition to your next opportunity. Understanding your rights and what you’re entitled to can make a big difference — especially with guidance from an experienced employment law attorney in Denver.
Whether you’re negotiating a severance package, trying to understand a severance agreement you’ve been handed, or wondering if you’re even eligible for one, it helps to know the basics. Here’s everything you need to know about severance pay, including when it’s offered, what it includes, and why working with an employment law attorney in Denver is often a smart move.
What Is Severance Pay?
Severance pay is compensation provided to an employee after termination, typically in situations like layoffs, company restructuring, or mutual separation. It can be paid out as a lump sum or in installments over a specific period. Severance is meant to help bridge the financial gap between jobs, giving employees some cushion while they search for new work.
Severance packages are not required under federal or Colorado law unless a contract, company policy, or collective bargaining agreement says otherwise. However, many employers offer severance voluntarily to protect their reputation, reduce the risk of legal claims, or provide goodwill.
What’s Included in a Severance Package?
A severance package can include more than just money. In addition to salary continuation or a lump-sum payout, severance agreements may include:
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Extended health insurance (COBRA assistance)
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Payment for unused vacation or sick leave
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Job placement assistance or outplacement services
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Continued vesting in retirement plans or stock options
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A release of legal claims against the employer
Because the fine print can significantly impact your rights and future benefits, it’s essential to review any severance agreement carefully. This is where an employment law attorney in Denver can offer critical support.
Are You Entitled to Severance?
Not all employees receive severance. Unless your employer has a formal policy or it’s outlined in your employment contract, there’s no automatic entitlement. However, some employers have standard severance practices based on tenure or job level.
Additionally, if your termination may be legally questionable — such as discrimination, retaliation, or whistleblower-related — the company might offer severance in exchange for a release of claims. In these situations, having an employment law attorney in Denver review your case can help you understand whether the offer is fair or if you have grounds for a stronger legal claim.
Should You Accept the Offer?
Many people feel pressure to sign a severance agreement right away, especially when emotions are high after a termination. But signing a severance agreement often means waiving your right to pursue any legal action against your employer — even if you were wrongfully terminated.
It’s important not to rush. Take the time to read the entire agreement and seek legal counsel before signing. An employment law attorney in Denver can help you:
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Clarify the legal language in the agreement
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Identify any hidden waivers or limitations
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Evaluate whether the compensation is reasonable
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Negotiate for better terms if appropriate
Employers often expect some back-and-forth, so don’t assume the first offer is final. Having a knowledgeable advocate on your side levels the playing field and helps you avoid giving up valuable rights.
What If You’ve Already Signed?
If you signed under pressure, without understanding the terms, or believe the agreement was unfair, you might still have options. While challenging a signed severance agreement can be difficult, a skilled employment law attorney in Denver can review your case to see if there’s a legal basis for revocation, such as coercion, fraud, or lack of consideration.
Timing matters. Some agreements allow a brief “revocation period” during which you can change your mind. Acting quickly can make all the difference.
Why Legal Advice Matters
Severance negotiations can feel overwhelming, especially when you’re dealing with the stress of job loss. Employers often involve their legal teams in drafting these agreements, which means you should have someone in your corner too.
An experienced employment lawyer understands both the legal and practical aspects of severance. They can spot potential red flags, protect your interests, and advocate for better terms if needed. Even if you think the offer seems fair, having a legal expert review it gives you peace of mind.
Final Thoughts
Severance pay can offer crucial financial support after job loss — but only if the agreement works in your favor. Don’t let uncertainty or pressure push you into signing something you don’t fully understand. Whether you’re negotiating a new package or reevaluating a signed one, working with a trusted employment law attorney in Denver can help you make informed decisions that protect your rights and your future.
