Yes, you can ask for more severance pay, and in most cases you should. A severance offer is a transaction: the employer is buying a release of your legal claims, and the first number they put on the table is rarely the most they’re willing to spend. To ask for more, you counter in writing with a specific figure, backed by the dollar value of what you’re giving up and any legal exposure the employer wants you to waive.
Why the First Offer Is Rarely the Final Offer
No federal law requires private employers to pay severance at all. When a company does offer it, the real purpose is to secure your signature on a release promising not to sue for wrongful termination, discrimination, retaliation, or anything else that happened during your employment. That release has value to the employer, which is exactly why the payment is negotiable.
Employers usually want more than the release, too. They may ask for confidentiality, a non-compete, or a non-disparagement promise. Each restriction costs you something in future flexibility, and each one gives you room to push back. The more the company is asking you to give up, the more your signature is worth.
Legal Leverage That Raises the Price of Your Signature
You do not need to threaten a lawsuit to use legal leverage. Naming the exposure calmly and factually is often enough to shift the numbers, because the employer’s lawyers already know what those claims are worth.
Unpaid Wages and Overtime
If you have evidence of unpaid overtime or misclassified hours, the release becomes more valuable. Under the Fair Labor Standards Act, employees can recover back wages plus an equal amount in liquidated damages, with a three-year statute of limitations for willful violations.1U.S. Department of Labor. Handy Reference Guide to the Fair Labor Standards Act An employer facing that exposure has strong reason to settle it inside the severance package rather than risk litigation.
WARN Act Notice
The Worker Adjustment and Retraining Notification Act requires 60 days’ written notice before a mass layoff or plant closing.2Office of the Law Revision Counsel. 29 USC Chapter 23 – Worker Adjustment and Retraining Notification If the employer skipped that notice, each affected employee can recover back pay and benefits for up to 60 days.3Office of the Law Revision Counsel. 29 USC 2104 – Administration and Enforcement of Requirements That is a concrete number you can put in your counteroffer. Some states have their own WARN-style laws with lower thresholds.
Age Discrimination Protections
Workers over 40 get special protection when signing a release. Under the Older Workers Benefit Protection Act, a waiver of age discrimination claims is only valid if it is written in plain language, specifically names the Age Discrimination in Employment Act, advises you to consult an attorney, and gives you adequate time to consider the offer.4Office of the Law Revision Counsel. 29 USC 626 – Recordkeeping, Investigation, and Enforcement If any of those pieces are missing, the waiver is unenforceable. An employer who needs a valid release from an older worker has extra reason to make the package worth signing.
Overbroad Confidentiality and Non-Disparagement Clauses
In 2023, the National Labor Relations Board ruled in McLaren Macomb that employers cannot offer severance agreements requiring employees to broadly waive rights under the National Labor Relations Act. Overly broad non-disparagement and confidentiality clauses violate the law even if the employee never signs.5National Labor Relations Board. Board Rules That Employers May Not Offer Severance Agreements Requiring Employees to Broadly Waive Labor Law Rights If your draft contains sweeping restrictions on what you can say about your workplace, pointing that out gives you room to narrow the clause or trade it for better terms elsewhere.
Build the Counter With Hard Numbers
Emotional appeals rarely move an HR department. What works is a documented gap between what the company offered and what you are actually losing. Pull these figures before you respond.
COBRA and Health Coverage
Losing employer health coverage is often the biggest hidden cost of a layoff. Under COBRA, you can continue your existing group plan, but the employer can charge up to 102 percent of the full plan cost, which includes the portion they previously covered plus a 2 percent administrative fee.6U.S. Department of Labor. An Employee’s Guide to Health Benefits Under COBRA Coverage generally lasts 18 months, with extensions up to 36 months in certain circumstances.7U.S. Department of Labor. COBRA Continuation Coverage Get a written quote for your COBRA premium, multiply by the months you expect to need it, and put that number in your counter. Asking the employer to cover COBRA premiums for a set period is one of the most common and most successful severance asks.
Bonuses, Commissions, and Pro-Rated Pay
Check whether you are owed bonuses for completed performance periods, earned sales commissions, or pro-rated incentive pay for the current year. Many of these amounts count as earned wages regardless of whether you are still employed when they normally pay out. Your handbook and compensation plan documents spell out the triggers. Listing these separately in your counter distinguishes what you are owed from what you are asking for, which strengthens both.
Unvested Equity
If you hold unvested options or restricted stock units, calculate the current market value and document what you forfeit at termination. Most option plans give you roughly 90 days after your last day to exercise vested options, and unvested shares disappear. Accelerated vesting, where the company vests some or all of your outstanding equity as part of the deal, can be worth more than additional weeks of base pay. Ask for it explicitly.
Performance Record and Tenure
Compile recent performance reviews, merit awards, and documentation of above-average contributions. This does not carry a direct dollar value, but it reframes the picture. A bare-minimum offer to a long-tenured employee with strong reviews reads as unreasonable, and the person on the other side knows it.
Non-Cash Terms Worth Pushing On
Money is the obvious focus, but several non-cash terms can matter as much for your next chapter. These are often easier for the employer to grant because they do not hit the severance budget directly.
Non-Compete Language
If a non-compete appears in the severance draft or was signed at hire, this is the moment to renegotiate. Non-competes are not all-or-nothing. Ask to shorten the restricted period, narrow the geographic scope, tighten the definition of a competing business, or drop the clause entirely in exchange for accepting a smaller cash package. A year-long block on working in your field can cost you far more than any severance bump.
Mutual Non-Disparagement
Most drafts prohibit you from speaking negatively about the company. Ask for the promise to run both ways, so the company also agrees not to disparage you. Given McLaren Macomb, overly broad language may be unenforceable anyway, which is leverage to either narrow the clause or extract concessions elsewhere.
References
A neutral reference clause controls what HR says when future employers call. At minimum, get language confirming your dates of employment, job title, and salary, and stating that the company will not volunteer information about the circumstances of your departure or rehire eligibility. It costs the employer nothing and can protect your job search.
Outplacement Services
Outplacement covers career coaching, resume help, and job-search support. Many employers will add it on request even when it is not offered by default. If the company will not move on cash, this is a reasonable fallback.
How to Submit the Counteroffer
Timing shapes the whole conversation. If you are 40 or older, the law gives you at least 21 days to consider an individual offer, or 45 days if the offer is part of a group layoff or exit incentive program.4Office of the Law Revision Counsel. 29 USC 626 – Recordkeeping, Investigation, and Enforcement Workers under 40 do not get a federally mandated window, but most agreements still include a reasonable consideration period. Do not let urgency push you into signing before you have run the numbers.
Send your counter in writing, by email or tracked letter, to the HR contact or legal representative named in the termination documents. Keep it professional and cooperative. Frame the ask around specific figures and concrete terms. A message that says “here is what I need and here is why the numbers support it” lands very differently from “this is unfair.”
After you send it, expect a meeting, a revised offer, or pushback. Stay reachable and keep the conversation moving before the original offer expires. Document everything. Anything promised on a call needs to appear in the final written agreement to mean anything.
Payment Structure Affects Taxes and Unemployment
Severance is taxed as ordinary income. The IRS treats it as supplemental wages, withheld at a flat 22 percent federal rate, with a 37 percent rate on supplemental wages above $1 million for the year.8Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide Severance is also subject to Social Security and Medicare taxes; the Supreme Court held in United States v. Quality Stores that severance payments are wages for FICA purposes.9Justia US Supreme Court. United States v. Quality Stores, Inc., 572 US 141 (2014)
Structure matters. A lump sum in one calendar year can push you into a higher marginal bracket, while installments across two years may lower the total bill. Unemployment interacts with severance differently in every state. Some states pay benefits immediately regardless of severance, others reduce or delay benefits until the severance period runs out, and a few pro-rate lump sums into weekly equivalents. In offset states, a lump sum may get you to full unemployment eligibility sooner than installments that suppress your weekly benefit for months. Confirm with your state unemployment agency before you lock in the payment structure, because the wrong choice can quietly cost you months of benefits.
Before You Sign the Revised Agreement
Once you reach a deal, the employer drafts a revised release. Read it against your notes from the negotiation. Verbal concessions that did not make it into the document are worth nothing.
Get an Attorney to Review It
Having an employment attorney review the final draft is worth the cost in almost every case. An attorney spots overbroad non-compete language, waivers that give up more than you realize, confidentiality terms that could interfere with an unemployment claim, and missing terms that were part of the deal. A straightforward review typically runs between $1,000 and $3,000. The OWBPA actually requires the employer to advise you in writing to consult an attorney, so the step is built into the process.10U.S. Equal Employment Opportunity Commission. Q&A – Understanding Waivers of Discrimination Claims in Employee Severance Agreements
Use the Revocation Period
If you are 40 or older, federal law gives you at least seven days after signing to revoke the agreement, and the employer cannot shorten or waive that period.4Office of the Law Revision Counsel. 29 USC 626 – Recordkeeping, Investigation, and Enforcement The agreement is not enforceable until that window closes. Workers under 40 have no federally mandated revocation period, though some agreements provide one anyway. Once the window passes without either side backing out, payment starts on the agreed schedule, and the release becomes binding.