What to Know Before Signing a Severance Agreement in Colorado
What to Know Before Signing a Severance Agreement in Colorado
If you've recently been laid off or are facing termination in Colorado, you may be presented with a severance agreement. These agreements often include compensation in exchange for waiving certain legal rights. While it may be tempting to sign quickly—especially during a stressful time—it's essential to understand exactly what you're agreeing to before putting pen to paper.

At the Law Office of Ralph G. Torres, we help individuals in Denver evaluate severance agreements and protect their legal interests before signing.
What Is a Severance Agreement?
A severance agreement is a legally binding contract between an employer and employee that typically offers additional pay or benefits in return for the employee releasing the employer from future legal claims. These agreements are common in layoffs, downsizing, or high-level terminations.
Key Points to Consider Before Signing
1. You May Be Waiving Your Right to Sue
Most severance agreements include a general release clause, which means you're giving up the right to bring claims related to your employment. This could include claims for wrongful termination, discrimination, or unpaid wages.
2. Review Non-Compete or Non-Solicitation Clauses
Your agreement may include restrictions on your future employment. Make sure you understand how long these restrictions last and whether they could affect your ability to work in your field.
3. Consider the Financial Terms
How much are you being offered—and is it worth what you're giving up? Severance pay isn't guaranteed by law in Colorado, so the terms are negotiable. You may be able to ask for more compensation, extended health benefits, or a better payout schedule.
4. Understand Confidentiality and Non-Disparagement Clauses
These provisions can prevent you from discussing the terms of the agreement or speaking negatively about your former employer. Make sure you know how long these clauses last and what consequences exist for violating them.
5. You Have Time to Review
Federal law gives employees 21 days to consider a severance agreement that includes a waiver of age discrimination claims (if you're 40 or older), along with a 7-day period to revoke your acceptance after signing. Even if you're under 40, you should still take time to review it carefully.
Get Legal Guidance Before Signing
A severance agreement is more than just a paycheck—it's a legal contract with lasting consequences. Before signing, consider having an attorney review the agreement to ensure your rights are protected and to explore whether negotiation is possible.
At the Law Office of Ralph G. Torres, we work with employees throughout Denver to help them understand the full impact of their severance agreements. We can assess whether the terms are fair, explain your options, and help you respond strategically.
