What Washington, D.C. Employees Should Know Before Signing a Severance Agreement
Losing a job — whether through a layoff, restructuring, or termination — is stressful under any circumstances. When an employer follows that news with a severance agreement and a deadline to sign, it can feel overwhelming. For employees in Washington, D.C., the stakes are especially high because the District offers some of the strongest employment protections in the country. Understanding what a severance agreement is, what it can and cannot include under D.C. law, and when you should seek legal counsel can make a significant difference in your financial security and your future opportunities.
This article provides general educational information about severance agreements in Washington, D.C. It is not a substitute for personalized legal advice from a licensed employment attorney.
What Is a Severance Agreement?
A severance agreement is a legally binding contract between an employer and a departing employee. The employer agrees to provide certain compensation or benefits — and in return, the employee agrees to fulfill certain obligations that protect the employer's interests.
Common provisions found in D.C. severance agreements include:
- Severance pay — A financial payout provided upon separation from employment
- General release of claims — A waiver of the employee's right to sue for harassment, discrimination, or other unlawful employment practices
- Non-disclosure obligations — Requirements to protect the employer's confidential and proprietary information
- Non-disparagement clauses — Prohibitions on making unfavorable statements about the employer, including online
- Non-compete and non-solicitation covenants — Restrictions on working for competitors or soliciting former clients or colleagues
- Continuation of benefits — Terms addressing ongoing health insurance or other benefits after departure
Is Severance Pay Required in Washington, D.C.?
Many employees are surprised to learn that D.C. law does not require employers to offer severance pay. District of Columbia labor laws do not have any laws requiring an employer to pay severance pay to an employee. If an employer chooses to provide severance benefits, however, it must comply with the terms of its established policy or employment contract.
This means that if your employer has a written severance policy or your employment contract guarantees severance, they are legally obligated to honor those terms. Beyond that baseline, the amount and structure of any severance package is largely a matter of negotiation.
Regardless of whether you receive severance pay, you are always entitled to payment of unpaid wages, accrued but unused paid time off, 401(k) contributions, and other vested benefits — these cannot be withheld from you.
Washington, D.C.'s Unique Employment Protections
One of the most important reasons D.C. employees should carefully review any severance agreement is the strength of local law. The District offers significantly broader worker protections than federal law, which gives many employees in Washington, D.C. greater leverage in severance negotiations.
The D.C. Human Rights Act (DCHRA)
Under the D.C. Human Rights Act, there are 18 protected classes for Washington, D.C. workers — far more than the categories covered under federal law. These include race, color, religion, national origin, sex, age, marital status, personal appearance, sexual orientation, gender identity or expression, family responsibilities, political affiliation, disability, matriculation, genetic information, credit information, status as a victim of domestic violence or stalking, and homeless status.
Critically, the DCHRA applies to employers of all sizes — even those with just one employee. Federal anti-discrimination laws like Title VII, by contrast, only apply to employers with 15 or more employees. This means that if you work for a small employer in D.C. and you believe you were discriminated against or wrongfully terminated, you may have claims under the DCHRA even if federal law does not protect you. Because the DCHRA has no caps on compensatory damages (unlike federal law), employees who have potential discrimination claims are often in a stronger position to negotiate more favorable severance terms.
D.C.'s Near-Total Ban on Non-Compete Agreements
One of the most significant D.C.-specific laws affecting severance agreements is the District's sweeping restriction on non-compete clauses. As of January 1, 2025, the restriction on non-compete clauses applies to employees earning less than $158,363 annually (or less than $263,939 for medical specialists). For most D.C. workers, a non-compete clause included in a severance agreement is unenforceable by law.
Employers may still enter into non-compete agreements with highly compensated employees who earn above those thresholds, but even then, strict requirements apply — including specifying the functional scope, geographic area, and duration of the restriction. Employers may not retaliate against covered employees who refuse to sign a non-compete agreement.
If a severance agreement presented to you includes a non-compete clause, it is important to understand whether that clause is even legally enforceable under current D.C. law before agreeing to it.
Key Federal Protections: The OWBPA and Employees Over 40
If you are 40 years of age or older, federal law provides additional protections that directly impact your severance agreement. Under the Older Workers Benefit Protection Act (OWBPA) — an amendment to the Age Discrimination in Employment Act (ADEA) — any severance agreement that asks you to waive age discrimination claims must meet strict requirements:
- The agreement must be written in plain, understandable language
- It must specifically reference your ADEA rights
- The employer must advise you in writing to consult with an attorney before signing
- You must be given at least 21 days to consider the agreement (or 45 days if the offer is part of a group layoff or reduction-in-force)
- After signing, you have 7 days to revoke your acceptance — and the agreement does not become enforceable until that period expires
If these requirements are not fully met, the waiver of your age discrimination claims may be void as a matter of law. It is worth noting that even after signing a valid release, the Equal Employment Opportunity Commission (EEOC) always retains the right to investigate and enforce the ADEA — so a severance agreement cannot lawfully prohibit you from filing a charge with the EEOC.
Severance Agreements and Unemployment Benefits in D.C.
If you receive a lump-sum severance payment attributable to a specific period of time, you may be ineligible for unemployment benefits for that period. If the lump sum is not tied to a specific timeframe, you will generally be ineligible for unemployment only for the week in which the payment is made. It is important to understand how the structure of your severance pay may affect your ability to collect unemployment benefits while you search for new work.
COBRA and Health Insurance After Separation
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), if you have been covered by your employer's group health insurance plan, you are entitled to temporary continuation of that coverage at group rates following your termination. COBRA coverage can last up to 18 months in most circumstances, or up to 36 months in certain qualifying situations. Be aware that under COBRA you will typically pay the full premium — including both the portion you previously paid as an employee and the portion your employer contributed — which can be a substantial cost.
Red Flags to Watch for in a Severance Agreement
Before signing anything, look carefully for the following provisions that may not be in your best interest:
- Overly broad releases — Waivers that are vague or sweep in claims you may not realize you're giving up
- Unenforceable non-compete clauses — Restrictions that may be illegal under D.C.'s non-compete ban but could still intimidate you if you don't know your rights
- Inadequate consideration — A release must be supported by something of value beyond what you are already owed; a release in exchange for wages you had already earned, for example, may not be enforceable
- Missing OWBPA disclosures — If you are over 40 and the agreement does not include the required review period and attorney advisement, the waiver of age claims may be invalid
- Confidentiality clauses — Provisions that are overly broad may conflict with your rights to speak about potential illegal conduct
Should You Negotiate Your Severance Agreement?
Severance agreements are rarely take-it-or-leave-it propositions. Many employers expect some degree of negotiation, and the strength of any potential legal claims you hold — including claims under the DCHRA — can significantly improve your bargaining position. Items that may be negotiable include the amount of severance pay, the duration of benefits continuation, the scope of a non-disparagement clause, and even the timing of payments.
An experienced employment attorney can review your agreement, assess whether you have any underlying claims that increase your leverage, and help you negotiate terms that better protect your interests.
How Leeds Law Firm Can Help
At Leeds Law Firm, our employment law team helps Washington, D.C. employees navigate the complexities of severance agreements — from reviewing the fine print to negotiating better terms and, when necessary, pursuing claims when an employer has acted unlawfully. If you have received a severance agreement and are unsure whether to sign, we encourage you to reach out to our firm for a consultation before you put pen to paper.
Conclusion
A severance agreement can offer important financial support during a difficult transition — but it can also require you to give up significant legal rights. In Washington, D.C., the combination of strong local protections under the DCHRA, the District's near-total ban on non-compete agreements, and federal safeguards for workers over 40 means that many employees have more leverage — and more rights — than they realize. Taking the time to understand what you are signing, and consulting with a qualified employment attorney before you do, can make a meaningful difference in your financial and professional future.
This article is intended for general informational purposes only and does not constitute legal advice. Employment law is highly fact-specific. Please consult a licensed attorney for guidance tailored to your individual situation.
