Severance Agreements After a Dallas Termination: Six Things Wrongful Termination Lawyers in Dallas Check Before Anyone Signs
A severance agreement usually arrives at the worst possible time. The employee has been told the position is being eliminated or the relationship is no longer working, an HR representative slides a document across the table, and the only message that registers is the dollar figure on page one. The wrongful termination lawyers in Dallas at The Mundaca Law Firm see these documents almost every week, and the dollar figure is rarely the most important term. What the employee gives up in exchange for that payment, and what the employer is hoping the employee will not notice, often matters more.
Texas does not require an employer to offer severance, and it does not give an employee much room to renegotiate after signing. The leverage exists in the days between when the document is handed over and when it is signed. The six items below are the ones we look at first.
The Release of Claims and What It Actually Covers
Almost every severance agreement asks the employee to release “any and all claims” against the employer. The phrase looks routine and is anything but. A broad release wipes out claims under Chapter 21 of the Texas Labor Code, Title VII, the ADA, the ADEA, the FLSA, the Sabine Pilot doctrine, and most contract claims tied to the employment. A few rights cannot be released by private agreement, including the right to file a charge with the EEOC or the Texas Workforce Commission, claims for vested retirement benefits, and pending workers’ compensation claims. If you suspect you were fired for an illegal reason, signing a release before that question is examined can close the door on a claim worth far more than the severance.
OWBPA Compliance for Employees Over 40
If you are 40 or older, the Older Workers Benefit Protection Act sets specific rules the agreement must follow to validly release age discrimination claims. You are entitled to at least 21 days to consider the agreement, or 45 days if the severance is offered as part of a group reduction in force, along with a 7-day revocation period after signing. The document must advise you in writing to consult an attorney and must use language an ordinary person can understand. A failure on any of these points can make the ADEA release unenforceable, even if the employee signed.
Non-Compete, Non-Solicitation, and Confidentiality Restrictions
Severance documents often contain restrictive covenants buried near the back. A non-compete clause must satisfy the Texas Business and Commerce Code, including reasonable limits on time, geography, and scope of activity, and must be supported by valid consideration. Non-solicitation clauses receive similar scrutiny. Confidentiality language about trade secrets, customer information, and internal processes can outlive the employment relationship by years. Dallas employees regularly agree to restrictions in severance that go well beyond what their original offer letter required, simply because the new clauses were never flagged.
The Real Value of the Payment
The number on page one is rarely the full picture. Severance can be paid as a lump sum or in installments, and each option carries different tax and unemployment consequences in Texas. Unused vacation, accrued bonuses, earned commissions, and unreimbursed expenses are sometimes folded into the severance figure rather than paid separately as wages already owed. Stock options, restricted stock units, and 401(k) vesting on the termination date should be checked against the original grant agreements. A severance that looks generous in isolation can turn modest once these missing pieces are accounted for.
Non-Disparagement, Confidentiality of the Agreement, and Carve-Outs
Most severance agreements include a non-disparagement clause and require the employee to keep the agreement confidential. Two things matter here. The non-disparagement clause should be mutual, binding the company and at least its key managers, not just the employee. The confidentiality clause should carve out communications with the EEOC, the Texas Workforce Commission, the National Labor Relations Board, and other government agencies, along with disclosures required by law and discussions with a spouse or attorney. Without those carve-outs, a routine conversation can become a breach of contract.
Benefits, References, and Unemployment
The agreement should address what happens to health insurance, often through COBRA continuation, and whether the employer will subsidize premiums for any period. References matter just as much. A neutral reference clause limiting the company to confirming dates of employment and position can protect a job search for months or years. Unemployment treatment is also worth confirming. An employer that agrees not to contest a claim with the Texas Workforce Commission removes a real source of risk during the transition.
When to Talk With Wrongful Termination Lawyers in Dallas Before Signing
A severance agreement is a final document. Once it is signed and the revocation period passes, the legal claims it covers are gone for good. The wrongful termination lawyers in Dallas at The Mundaca Law Firm review severance offers, identify clauses that should be modified or removed, and assess whether the underlying termination itself was lawful. If you have been handed a severance agreement and a deadline to sign it, our firm is available for a confidential consultation about the document and the firing behind it.