Massachusetts Severance Pay and What a Release Actually Waives

Severance is the point where contract law takes over from the statutes described in Massachusetts labor laws covering wages, hours, and worker rights. This article covers when severance is owed, what a release of claims gives up, the federal timing rules that govern age-discrimination waivers, the terms that commonly ride along with the release, and how a severance payment interacts with unemployment benefits.

No Massachusetts statute requires severance pay

Massachusetts has no severance statute. An employer that ends the employment relationship owes the wages the worker already earned and nothing more, unless a separate promise exists. The Wage Act, Mass. Gen. Laws ch. 149, § 148, reaches earned wages, commissions that are definitely determined and due, and accrued vacation, and it requires payment in full on the day an employee is discharged. Severance is different in kind: it is money paid in exchange for a promise, not compensation for work already performed.

Four things create an obligation to pay severance in Massachusetts:

• An individual employment or executive agreement that specifies severance on certain triggers
• A written severance policy or an employer-sponsored severance plan governed by federal benefits law
• A collective bargaining agreement
• A separation agreement negotiated and signed at the end of employment

Notice obligations are a separate question from money. The Massachusetts WARN Act addresses advance warning for large layoffs and plant closings; it does not convert that warning into a severance entitlement. Wages already earned come due on the statutory schedule whether or not any agreement is signed, and those deadlines are set out under the Massachusetts final paycheck law.

What a release of claims actually waives

The release is the part of the agreement the employer is buying. A standard general release covers discrimination and retaliation claims, wrongful-termination and breach-of-contract claims, defamation, and claims for unpaid bonuses or commissions, in each case limited to conduct that occurred before the signing date.

The most valuable claim released in a typical Massachusetts separation is the discrimination claim. Mass. Gen. Laws ch. 151B, § 5 gives a worker 300 days from the discriminatory act to file a complaint with the Massachusetts Commission Against Discrimination, and that administrative filing is the gateway to a court claim. A signed release closes that route for conduct predating the signature.

Several things survive a release regardless of how the document is worded:

• The right to file a charge with the MCAD or the federal Equal Employment Opportunity Commission, or to respond to an agency investigation, though the worker generally cannot collect money from a claim already released
• Workers’ compensation claims
• Unemployment benefits
• Vested retirement and equity that was already earned under a plan
• Claims arising from conduct that happens after the signing date

Earned wages have to be named separately

Wage Act claims carry unusual weight in Massachusetts. Under Mass. Gen. Laws ch. 149, § 150, an employee who prevails on a Wage Act claim is awarded treble damages and reasonable attorneys’ fees as a mandatory remedy, not a discretionary one, and the claim can be brought within 3 years of the violation. The same section requires the employee to file a complaint with the Attorney General’s Fair Labor Division before bringing a private suit.

Because those remedies are automatic, Massachusetts separation agreements typically carry a stand-alone paragraph that identifies the Wage Act by name and lists the categories being released, rather than relying on a general “any and all claims” sentence. The same agreements usually include an affirmative statement that the employee has been paid all wages, overtime, commissions, and accrued vacation due through the separation date. That representation is worth checking against actual pay records before signing, because unused time off is a common gap: Massachusetts treats accrued vacation as wages under § 148, while other categories follow the rules described in does Massachusetts require PTO payout at termination.

Timing rules for workers 40 and older

Federal law imposes hard timing requirements on any release that waives age-discrimination claims. The Older Workers Benefit Protection Act, codified at 29 U.S.C. § 626(f), sets the conditions for a waiver to count as knowing and voluntary, and the implementing regulation at 29 C.F.R. § 1625.22 spells out how each condition is applied. Massachusetts employers follow these rules because a defective waiver leaves the age claim alive even after the severance is paid.

1. The agreement is written to be understood

   The waiver must be part of an agreement written in a manner calculated to be understood by the individual employee, and it must refer specifically to rights or claims arising under the Age Discrimination in Employment Act.

2. Consideration beyond what is already owed

   The employee must receive something of value in addition to anything the employee was already entitled to. Paying out accrued vacation does not count, because that money is already owed under the Wage Act.

3. Written advice to consult an attorney

   The agreement must advise the individual in writing to consult with an attorney before signing.

4. The consideration period

   The individual must be given at least 21 days to consider the agreement. Where the exit incentive or termination program is offered to a group or class of employees, the period is at least 45 days, and the employer must disclose the job titles and ages of everyone eligible and everyone selected, along with the ages of those in the same job classification who were not selected.

5. The revocation window

   After signing, the individual has a period of at least 7 days to revoke the agreement, and the agreement does not become effective or enforceable until that period expires.

Workers under 40 have no equivalent federal timing protection. An employer offering severance to a 32-year-old can set a 3-day deadline and no revocation period, and the release will still be evaluated under ordinary contract principles.

Terms that travel with the release

The release is rarely the only obligation in the document. Four clauses appear in most Massachusetts separation agreements, and each carries its own legal limits.

Non-disparagement and confidentiality. The National Labor Relations Board held in its 2023 McLaren Macomb decision that an employer may not offer a severance agreement requiring employees to broadly waive rights under the National Labor Relations Act, including sweeping confidentiality and non-disparagement terms that would stop workers from discussing terms and conditions of employment. The ruling reaches non-supervisory employees covered by the Act, in union and non-union workplaces alike. **Noncompete restrictions.** The Massachusetts Noncompetition Agreement Act, Mass. Gen. Laws ch. 149, § 24L, carves out agreements made in connection with the cessation of or separation from employment, so long as the employee is expressly given seven business days to rescind acceptance. A noncompete inside a severance agreement with that rescission right escapes the garden-leave and 10-business-day notice requirements that apply to a non-compete agreement in Massachusetts signed at hire or mid-employment. **Cooperation clauses.** These require the departing employee to assist with litigation, audits, or transitions after the separation date. Whether the time is paid, and at what rate, is a negotiated term. **References and reemployment.** Many agreements fix the reference the employer will give, usually dates of employment and title only, and include a promise not to reapply. That promise sits outside the definition of a noncompetition agreement in Mass. Gen. Laws ch. 149, § 24L, so it is not measured against the statute’s consideration and notice rules. ## How severance affects unemployment benefits Severance and unemployment interact in a way that surprises people. Mass. Gen. Laws ch. 151A, § 1 counts termination, severance, or dismissal pay, and payment in lieu of dismissal notice, as remuneration under clause (r)(3). The same section extends the claimant’s benefit year by the period the individual is receiving that pay, which means severance allocated across weeks generally pushes back when benefits start rather than eliminating them. The statute carves out an exception: pay for unused vacation or sick leave, and termination or severance pay made in a lump sum in connection with a plant closing, are treated differently from ordinary severance under clause (r)(3). How a specific payment is characterized in the agreement therefore matters to the Department of Unemployment Assistance, which makes its own determination when a claim is filed for Massachusetts unemployment benefits. The agreement’s description of the separation matters for a second reason. A document that recites a discharge for misconduct creates a record the agency will see. A document that recites a layoff or an elimination of position creates a different one.