Don’t Sign Yet: How to Negotiate Your Severance (and What It Won’t Cover)

The calendar invite says “Quick sync.” Fifteen minutes later your laptop access is gone and there’s a PDF in your personal inbox: a severance agreement, a signature line and a deadline.

It’s very tempting to sign it that night and make the whole thing go away. Don’t, at least not yet.

This fall plenty of people are getting that PDF. In October alone, HubSpot said it would cut nearly 660 roles, FICO about 15% of positions and Dropbox about 200 roles, with “today” as the last day for most of those affected (Layoffs tracker, Dropbox). If you’re one of them, here’s how to treat that document like the negotiation it is.

First, Understand What You’re Being Paid For

No federal law requires severance. The U.S. Department of Labor is blunt about it: severance “is a matter of agreement between an employer and an employee” (DOL).

So why do companies offer it? Mostly to buy something from you: a release of legal claims. Your signature promises you won’t sue over the termination. That’s the key to the whole negotiation. The company wants your signature, and your signature has value. A first offer is usually a template, not a ceiling.

The Clock Is (Usually) on Your Side

If you’re 40 or older, federal age-discrimination law sets minimum timelines before a release of age claims is valid (EEOC):

• 21 days to consider an individual offer, or 45 days if you’re part of a group layoff.
• 7 days to revoke after you sign. Nobody can shorten or waive this.
• If the employer makes a material change to the offer, the 21-day consideration period starts over.
• Group layoffs also require the employer to share information about who was and wasn’t selected, by job title and age.

Under 40? There’s no federal minimum, but asking for a reasonable extension is normal. An employer who refuses to give you any time to review is telling you something.

Use that time. Sleep on it, read every clause, and if the stakes are high, pay an employment attorney for an hour of review.

What’s Actually Negotiable

Most people only think about weeks of pay. That’s the headline number, but it’s one lever of many:

• More weeks of pay: The core ask. Benchmarks help: Challenger, Gray & Christmas found average severance across industries rose to 19.3 weeks in its 2025 report (Challenger).
• COBRA premiums: A defined, budgetable cost for the employer, and one of the most common wins (see COBRA vs. the Marketplace for what it’s worth).
• Pro-rated bonus or earned commission: Especially if the performance period is mostly done.
• Equity treatment: Ask about vesting dates near your exit and the post-termination exercise window for options (more in what happens to your RSUs and options). Plan rules limit this, but windows sometimes flex.
• Unused PTO: Some states require it to be paid out anyway. Confirm it’s in the numbers.
• Neutral reference and departure messaging: Costs the company nothing and is almost always granted.
• Narrower non-compete or non-solicit: Depends on your state and role, but worth asking.
• Mutual non-disparagement: If you’re agreeing not to criticize them, they can agree to the same.
• Outplacement or coaching: Cheap for them, useful for you.

How to ask

Keep it short, polite and in writing. Thank them, say you’d like to sign, and present your request with a reason: your tenure, your results, a bonus period that’s almost finished, the time senior roles take to fill. Ask for specific things, not “a better package.” And remember that HR rarely has unlimited authority, so give them a request they can take upstairs.

The Math: Meet Priya

Priya is 42, a senior product director earning $200,000 a year (about $3,846 a week) after six years at the company. Her offer: 8 weeks of pay and benefits through the end of the month.

She asks for 16 weeks, three months of COBRA and her pro-rated bonus. She gets part of it:

Illustrative numbers. COBRA estimate uses KFF’s 2025 average family premium of $26,993/year at the 102% maximum COBRA rate (KFF, DOL).

• Weeks of pay: 8 (~$30,800) → 14 (~$53,800)
• Employer-paid COBRA: None → 3 months (~$6,900)
• Neutral reference: Not mentioned → In writing
• Total cash value: ~$30,800 → ~$60,700

One polite email roughly doubled the value of her package. That’s a great result.

Now look at it from the other side.

The Part Nobody Puts in the Agreement

Even after a strong negotiation, Priya has about three months of pay. Senior roles often take longer than that to land. And severance has a few catches that shrink it in practice:

• The withholding surprise. Severance is taxed as wages, and employers often withhold federal income tax at a flat 22% on supplemental pay (IRS Pub. 15). If your real bracket is 32% or 35%, you may owe more at tax time.
• It can delay unemployment. Every state treats severance differently. In California, severance doesn’t affect UI eligibility (CA EDD). In New York, severance paid within 30 days of your last day may affect your benefits (NY DOL). Check your state’s rules before you file.
• Unemployment is still capped. Once it starts, state UI pays roughly $235–$500 a week in most states, under 15% of a professional’s monthly expenses.
• “Voluntary” packages are different. If you’re offered a voluntary buyout rather than a layoff, read carefully. A voluntary separation can change your eligibility for both state benefits and private coverage.

Severance is a bridge. It’s rarely long enough to reach the other side on its own.

Your “Don’t Sign Yet” Checklist

1. Don’t sign in the room. Ask how long you have, and get it in writing.
2. Get the documents: the agreement, your equity grant agreements and plan summaries, and your benefits end dates.
3. Make a list of asks from the levers above and rank them.
4. Send one clear, written counter with reasons.
5. Check your state’s UI rules on severance, then file for unemployment promptly.
6. Run your runway math: severance + state UI + savings ÷ monthly expenses. If the answer is less than the time it takes to land a role at your level, you have a gap.

Where Cushion Fits

You don’t get to negotiate the gap after the layoff. You can only plan for it before. That’s what Cushion is for.

Cushion is private layoff insurance that pays out alongside state unemployment after a qualifying involuntary job loss:

• Meaningful coverage: Choose a target replacement rate of 40%, 50% or up to 60% of your verified gross income (combined with state benefits, up to $10,000/month) for 2 to 5 months.
• Unrestricted cash: Payments go straight to your bank account for the mortgage, childcare or COBRA premiums.
• Private and portable: Individually owned, it stays with you across employers. We never contact your employer or HR.
• Built for planners: Every policy has a 120-day vesting period, so it’s something you put in place while things are calm. Layoffs that happen on or before day 120 of a policy aren’t covered.

Negotiating severance is how you get the most out of a bad day. Cushion is how you make sure that a bad day doesn’t decide the next six months for you.

The best time to protect your income is while you have it. Get Cushion →

This article is for educational purposes only and isn’t legal, tax or financial advice. Severance rules and unemployment eligibility vary by state and situation, so consider talking to an employment attorney before signing a release. Coverage options, limits, waiting periods, and policy availability vary by jurisdiction and are subject to underwriting approval and individual policy declarations.