Understanding Severance Agreements in Washington State
Losing a job is one of the most stressful events a person can experience. When an employer offers a severance package, it can feel like a lifeline — but signing too quickly could mean giving up rights you may never get back. Whether you are navigating a layoff, a reduction in force, or a negotiated departure, understanding how Washington State law governs severance agreements is essential before you put pen to paper.
This article provides a general educational overview of severance agreements in Washington. It is not intended as personalized legal advice. If you have specific questions about your situation, we strongly encourage you to speak with a qualified Washington employment attorney.
Is Severance Pay Required in Washington State?
Many employees are surprised to learn that Washington imposes no mandatory severance pay requirements. Severance pay is a voluntary benefit, and Washington law does not require employers to provide it. However, if an employer promises severance pay through an employment contract, offer letter, or company policy handbook, it must adhere to the terms of that promise.
If you have been denied severance pay that was promised to you in writing — whether in an employment agreement, a company policy manual, or a union contract — you may have legal options worth exploring with an attorney.
What Is a Severance Agreement?
A severance agreement is a contract between an employer and an employee signed upon termination. Severance pay is offered as part of that agreement, which may also include other benefits such as continuation of healthcare coverage (COBRA) or outplacement/job counseling services — forming what is commonly called a severance package.
Most severance agreements include a release of claims, meaning you agree not to sue your employer for wrongful termination, discrimination, or harassment. In exchange, you typically receive severance pay. It is critical to think carefully about whether you have any potential claims against your employer before signing — because once you sign, you generally cannot pursue those claims later.
What Claims Can Be Released Under Washington Law?
Employers in Washington must clearly list the claims being released under both federal and Washington state law. Releasable state claims in Washington include those under:
- The Washington Law Against Discrimination (WLAD)
- Washington's Equal Pay and Opportunities Act
- Washington's Fair Chance Act
- Washington's leave laws
- Washington's minimum wage and overtime laws
Importantly, any agreement should only waive claims that arose before the agreement's effective date — employers cannot lawfully require employees to release future claims.
Washington's Silenced No More Act: Limits on Non-Disparagement Clauses
Washington has enacted some of the strongest worker protections in the country regarding non-disclosure and non-disparagement clauses. The Silenced No More Act (effective June 9, 2022) was passed in response to the #MeToo movement and prevents non-disclosure or non-disparagement clauses in any agreement between an employer and employee that would prevent an employee from disclosing conduct they reasonably believe to be illegal.
In practical terms, non-disparagement clauses in Washington severance agreements cannot prevent employees from disclosing conduct they reasonably believe to be illegal — including discrimination, harassment, retaliation, wage and hour violations, or sexual harassment or assault. Employers in violation of this law may face significant penalties.
Separately, under Washington law (RCW 49.44.210), non-disclosure agreements that prevent disclosure of sexual assault or sexual harassment are prohibited, with a limited exception for settlement agreements between an employer and a former employee. Notably, while employers cannot prevent employees from disclosing the existence of a settlement agreement related to such conduct, they may still prevent disclosure of the settlement amount.
Non-Compete Clauses in Severance Agreements: Major Changes Ahead
Non-compete clauses are sometimes included in severance agreements as a condition of receiving severance pay. Washington has been steadily tightening restrictions on non-compete agreements, and a sweeping new law is on the horizon.
Current Law (Through June 29, 2027)
Under Washington's current non-competition statute (RCW 49.62), non-compete agreements are subject to strict earnings thresholds. For 2026, employers may only enter into non-competition agreements with employees earning above $126,858.83 per year, and with independent contractors earning above $317,147.09 per year. Non-compete agreements that do not meet these thresholds may be void and unenforceable. Additionally, Washington law generally prohibits employers from forcing employees to litigate non-compete disputes under another state's laws.
Near-Total Ban Effective June 30, 2027
On March 23, 2026, Washington Governor Bob Ferguson signed Engrossed Substitute House Bill 1155 (HB 1155) into law, dramatically expanding Washington's non-competition restrictions. Beginning June 30, 2027, this law renders nearly every non-compete agreement — past or future — void and unenforceable, regardless of the employee's compensation level, industry, or when the agreement was signed.
Under the new law, employers will be prohibited from enforcing, attempting to enforce, or even threatening to enforce a non-compete against a Washington-based employee or independent contractor. Employers must also notify current and former employees by October 1, 2027, that covered non-competition covenants are no longer enforceable. Violations can result in statutory damages, attorneys' fees, and Attorney General enforcement actions.
Note: Confidentiality agreements and certain narrowly drafted non-solicitation provisions remain permitted under the new law, provided they do not function as a de facto non-compete.
Special Protections for Workers Age 40 and Older
If you are 40 years of age or older, federal law provides additional protections when it comes to severance agreements. The Older Workers Benefit Protection Act (OWBPA) — an amendment to the federal Age Discrimination in Employment Act (ADEA) — sets strict requirements for any severance agreement that asks a worker age 40 or older to waive their right to sue for age discrimination.
To be valid and enforceable, a severance agreement waiving ADEA rights for workers 40 and older must meet all of the following requirements:
- The agreement must be written in plain, understandable language
- The agreement must specifically reference ADEA rights and claims
- The employer must advise the employee in writing to consult an attorney before signing
- The severance must constitute consideration beyond what the employee was already owed
- The employee must be given at least 21 days to consider an individual severance agreement
- In a group layoff involving two or more employees age 40 or older, employees must be given at least 45 days to consider the agreement
- The employee must be given 7 calendar days to revoke their signature after signing — this revocation right cannot be waived
If even one of these requirements is missing, the age discrimination waiver may be void — meaning an employee could potentially sign the agreement, collect the severance, and still pursue an ADEA claim. Additionally, releases may not include provisions that prohibit employees from filing a charge or complaint with the Equal Employment Opportunity Commission (EEOC).
Accrued PTO and Severance: Know the Difference
Washington employees should be aware that accrued paid time off (PTO) is generally considered wages under Washington law — provided the employer's policy promises a payout at separation. This means your employer cannot legally substitute your earned, unpaid PTO for severance pay. Severance pay should represent separate and additional compensation, not a relabeled version of PTO you already earned.
Can You Negotiate a Severance Agreement?
Yes — and many employees don't realize this. You are not required to sign a severance agreement immediately upon receiving it. Employers must give you a reasonable time to review the terms, and workers age 40 and older have specific statutory review periods as described above. Common areas employees may attempt to negotiate include:
- The total amount of severance pay
- The duration of healthcare continuation benefits
- The scope of the release of claims
- The language of any non-disparagement clause
- Outplacement services or professional references
An experienced Washington employment attorney can evaluate your specific agreement, identify any provisions that may be unlawful or overly broad, and help you negotiate more favorable terms.
What to Do If You Receive a Severance Agreement
If your employer has presented you with a severance agreement, consider taking the following steps before signing:
- Read the entire agreement carefully, including all fine print and referenced policies.
- Identify all claims being released — make sure you understand what legal rights you are giving up.
- Consider whether you have any unresolved workplace claims, such as discrimination, unpaid wages, or retaliation.
- Confirm that any accrued PTO is being paid separately, not rolled into your severance.
- Review any non-compete, non-disclosure, or non-solicitation clauses carefully, especially given Washington's evolving law in this area.
- Consult an employment attorney before signing — many offer free or low-cost initial consultations.
Conclusion: Don't Sign Away Your Rights Without Knowing Them
Severance agreements in Washington State involve complex intersections of state and federal law. From Washington's powerful protections for whistleblowers and harassment survivors under the Silenced No More Act, to the sweeping non-compete ban taking effect in 2027, to strong federal protections for workers over 40 under the OWBPA, there is much more at stake than the dollar amount on the check.
At Leeds Law Firm, our employment law team helps Washington workers understand what is in their severance agreements, identify potential legal claims before they are signed away, and negotiate the best possible outcomes. Contact us today for a confidential consultation — because informed employees make better decisions.
This article is intended for general informational and educational purposes only and does not constitute legal advice. Employment laws are subject to change, and individual circumstances vary. Please consult a qualified Washington employment attorney for guidance specific to your situation.
