When Not to Sign a Severance Agreement in Minneapolis

You should not sign a severance agreement in Minneapolis without legal review if your termination may have been illegal, if wages or commissions are still owed to you, if the payment is too low relative to your actual legal claims, or if you have not had adequate time to review the agreement under Minnesota law.

The general release inside every severance agreement permanently surrenders your right to sue your employer for discrimination, retaliation, unpaid wages, and wrongful termination in exchange for a single payment. Minnesota employers are not required by law to offer severance at all. When they do, buying your legal silence is the point.

At Madia Law LLC, our Minneapolis employment lawyers have represented Minneapolis employees in severance reviews and employment litigation since 2009. If you have been offered a severance agreement or signed one within the last 15 days, call 612-349-2729 or contact us to start the conversation.

What Is a Severance Agreement?

A severance agreement is a contract in which your employer pays you money in exchange for a release of all legal claims arising from your employment, including claims you do not yet know you have. The U.S. Equal Employment Opportunity Commission notes that employees who sign releases without understanding their rights routinely waive claims that would have entitled them to significant recovery.

Minnesota does not require at-will employers to provide severance. When an employer makes an offer, the release of your claims is what they are buying. The payment reflects their estimate of their legal risk, not the actual value of your rights.

If you have received a severance agreement and are unsure what you may be giving up, our Minneapolis employment lawyers can help you evaluate what you are releasing before you sign.

For a legal consultation, call 612-349-2729

Situations Where You Should Not Sign Without Legal Review

You should not sign, or should not sign without legal review, in any of the following situations.

Your Termination May Have Been Illegal

A termination is illegal in Minnesota when it is driven by a protected characteristic or punishes conduct that the law protects. Protected characteristics under the Minnesota Human Rights Act and federal law include race, sex, age, disability, pregnancy, religion, national origin, and sexual orientation. Protected conduct includes:

• Reporting workplace discrimination or harassment internally or to a government agency
• Requesting medical leave or a disability accommodation
• Filing a workers’ compensation retaliation claim after a workplace injury
• Reporting fraud, safety violations, or financial misconduct as a whistleblower

Employers almost never state the real reason for a termination. If your reviews were positive until you filed a complaint, if you were selected for layoff while less experienced colleagues were kept, or if your medical condition came up before your discharge, those facts matter regardless of how the termination is labeled. A wrongful termination claim worth years of lost wages does not disappear when you sign a release. It becomes permanently uncollectible.

The Payment Does Not Reflect the Value of Your Claims

Severance amounts are set by the employer’s estimate of litigation risk, not by what is fair. An employee with a strong retaliation or discrimination claim is worth considerably more in legal exposure than two weeks of base pay. Before deciding whether a severance offer is adequate, you need an attorney’s assessment of whether viable claims exist and what they are worth. That requires reviewing the actual facts of your termination against the applicable statutes, not HR’s framing of events.

Wages, Commissions, or Benefits Are Still Owed to You

Most severance agreements release wage and hour claims, commission disputes, unpaid overtime, and ERISA benefit claims alongside discrimination claims. Employees frequently sign without accounting for amounts already owed to them, money that disappears the moment the release takes effect. Common examples include:

• Unpaid overtime: Misclassification as an exempt employee, resulting in uncompensated hours beyond 40 per week.
• Off-the-clock work: Pre-shift prep, post-shift tasks, or required training that was never paid.
• Withheld commissions: Earned commissions on completed transactions held back at termination.
• Illegal deductions: Amounts taken from paychecks without written post-incident authorization under Minn. Stat. 181.79.

Employees with long-term disability coverage, pension benefits, or ERISA-governed retirement accounts face additional complexity. A broadly worded release can affect those benefit claims depending on how the agreement is drafted and may require specific ERISA analysis. Those amounts need to be identified before any signature. If you suspect wages are owed, an attorney handling unpaid overtime and wage violations can evaluate that alongside the severance.

You Have Not Had the Time Minnesota Law Requires to Review the Agreement

Urgency is a deliberate strategy. Minnesota employment law provides two mandatory review windows that employer pressure cannot override.

Under Minn. Stat. 363A.31, Subd. 2, every employee has 15 calendar days to rescind a release of MHRA claims after signing. The agreement must inform you of this right in writing, or the waiver is invalid.

For workers over 40, the Older Workers Benefit Protection Act at 29 U.S.C. 626(f) requires all of the following for a valid ADEA waiver:

• Specific reference to ADEA rights by name.
• Written advice within the agreement to consult an attorney.
• At least 21 calendar days to review, extended to 45 days in a group termination or reduction-in-force.
• In group terminations, written disclosure of job titles and ages of all employees selected and not selected.
• 7 calendar days after signing to revoke; the waiver is not effective until that period expires.
• If the employer modifies the agreement, the 21-day clock restarts.

If any element is missing, the ADEA waiver is invalid, and age discrimination claims remain open.

Your Employer Violated the Law Before Making the Offer

The more an employer has to hide about the conduct preceding a termination, the more urgently it needs a signed release. Workplace retaliation is one of the most common precursors to a severance offer: an employee reports harassment or discrimination, the employer responds with manufactured performance issues or conditions designed to force them out, and a severance agreement arrives framed as routine.

Whistleblower situations follow the same pattern. Under Minnesota whistleblower protections at Minn. Stat. § 181.932 and applicable federal statutes, those workplace retaliation claims carry significant value. Signing without legal evaluation means walking away from both. Minnesota law also prohibits conditioning a severance release on the employee’s agreement not to report criminal conduct. A release obtained through coercion or material misrepresentation is voidable.

The Agreement Contains Restrictive Covenants That Limit Your Future

Under Minn. Stat. 181.988, non-compete agreements signed on or after July 1, 2023, are void and unenforceable in Minnesota, with two narrow statutory exceptions: non-competes signed in connection with the sale or dissolution of a business. If your agreement was presented after that date and contains a non-compete outside those exceptions, that clause does not bind you.

Non-solicitation and confidentiality clauses are not covered by the ban and remain potentially enforceable where reasonable in scope. A broadly written non-solicitation clause can function as a practical bar to continuing in your field, and overbroad confidentiality provisions carry separate legal problems under Minnesota’s Wage Disclosure Protection law.

Even where a restrictive covenant is unenforceable, some employers send cease-and-desist letters regardless of whether the clause would survive a court challenge. Reviewing agreement terms with a Minneapolis severance agreement attorney before signing gives you the ability to negotiate revised language rather than face that friction later.

What Minnesota Law Requires for a Valid Severance Release

A severance release in Minnesota must satisfy the following to be enforceable:

• Genuine consideration: The payment must offer something beyond what your employer was already legally required to give you. Final wages, accrued PTO owed under a written policy, and vested benefits you had already earned are not valid consideration; they were already yours.
• MHRA rescission notice: The agreement must inform you of the 15-day right to rescind under Minn. Stat. 363A.31, Subd. 2, as explained above, or the MHRA waiver is invalid.
• OWBPA compliance for workers over 40: Every element of 29 U.S.C. 626(f) must be satisfied for a valid ADEA waiver.
• No unemployment restriction: Any provision prohibiting an unemployment filing is void under Minnesota law; severance paid as wage continuation may affect the timing of benefit eligibility, but cannot eliminate the right to file.
• Voluntary execution: A release obtained through coercion, fraud, or material misrepresentation is voidable.

The Minnesota Department of Human Rights enforces the MHRA and is the primary state authority on these rescission rights.

Signing a severance release does not prevent you from filing a discrimination charge with the Equal Employment Opportunity Commission or the Minnesota Department of Human Rights. What a signed release eliminates is your right to receive monetary damages through that charge. The right to file remains intact.

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Common Mistakes Employees Make With Severance Agreements

These are the mistakes that cost Minneapolis employees the most in the severance process.

• Signing without legal review: Employers understand that job loss creates pressure to move quickly, and that pressure is their best tool for getting a signature before the employee understands what they are releasing.
• Assuming the offer is non-negotiable: Severance is negotiated routinely. An attorney experienced in severance agreements can send a written counter-proposal on your behalf, requesting a higher payment, extended benefits like COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage, removal of overbroad non-solicitation language, or a neutral reference arrangement. Viable legal claims create real leverage in that negotiation.
• Overlooking clawback provisions: Some severance agreements require you to repay the full severance payment if you violate the terms, such as by joining a competitor or breaching a confidentiality clause. These provisions are easy to miss in a dense agreement and can surface months after you have spent the money.
• Failing to preserve evidence: Emails, performance records, and HR communications supporting a discrimination, retaliation, or wage claim must be preserved lawfully before system access ends. Once employment terminates, that access typically ends immediately.
• Missing the rescission window after signing: If you signed within the last 15 days, the MHRA rescission window under Minn. Stat. 363A.31 may still be open. Contact an attorney immediately.

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Talk to a Minneapolis Employment Lawyer Before You Sign

Deciding whether to sign a severance agreement is not straightforward without knowing what you are releasing. At Madia Law LLC, we review severance agreements for Minneapolis employees, identify whether underlying claims exist and what they are worth, and advise on whether the offer reflects the realistic legal exposure the employer is trying to resolve. We work on contingency for employment matters with no upfront fees.

If you have been offered a severance agreement or signed one within the last 15 days, call 612-349-2729 or contact Madia Law LLC to start the conversation. Our office is at IDS Center, Suite 4155, 80 South 8th Street, Minneapolis, MN 55402.

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Call 612-349-2729 or complete a Case Evaluation form