Sign a severance agreement in Kentucky and you will almost always give up your right to sue your former employer. Kentucky law does not require employers to offer severance, so when an offer appears, the payment is for something. Usually it’s for your legal claims. Before signing, make sure you know exactly what you are giving away.
Your Final Paycheck Isn’t a Bargaining Chip
Start here. Wages you have already earned belong to you, whether you sign or not. According to KRS 337.055, your employer must pay all earned wages within the next normal pay period or within 14 days after you leave, whichever occurs later. The statute also prohibits employers from circumventing this requirement by any means.
If an agreement suggests that your last check depends on your signature, treat it as a red flag.
Read the Release Line by Line
The release is the heart of the agreement. Most of them are written broadly, covering “any and all claims” related to your job. This typically includes:
- Discrimination, harassment, and retaliation claims under federal law and the Kentucky Civil Rights Act.
- Wrongful termination and breach of contract claims.
- Unpaid bonuses or commissions. (Read this part carefully, as commissions you have already earned may still be owed to you.)
Some rights can’t be waived. A release can’t waive claims that arise after signing. It also can’t prevent you from filing charges with the EEOC or cooperating with an agency investigation. However, you may give up your right to collect money from those charges personally.
Workers 40 and Older Get Extra Protection
If you are 40 years old or older, there are additional requirements under federal law. The Older Workers Benefit Protection Act (OWBPA), codified at 29 U.S.C. § 626(f), requires that a waiver of age discrimination claims be valid only if:
- It specifically refers to the Age Discrimination in Employment Act (ADEA)
- You have at least 21 days to consider the offer, or 45 days if it is part of a group layoff
- You have at least 7 days to revoke the waiver after signing
In a group layoff, the employer must also disclose the job titles and ages of the people selected and those kept. This list can reveal patterns.
Look for Restrictions That Follow You Out the Door
Severance agreements often include obligations beyond the termination of employment. Be aware of:
- Non-compete and non-solicitation agreements. Kentucky does not have a general ban on these types of agreements. House Bill 813, introduced during the 2026 legislative session, would have prohibited non-competes for many low-wage workers. However, the bill never made it out of committee and was not passed. Despite this, Kentucky courts continue to enforce restrictions that they deem reasonable.
- If the employer later claims that you have breached the employment agreement, there may be terms for repayment or “clawback”.
- Open-ended cooperation clauses that require you to assist with future legal matters.
- Timing of payments and continuity of health coverage
The way payments are structured can also affect your unemployment benefits, so it’s important to ask about them before signing any documents.
Ask Why the Offer Exists
Employers rarely offer severance out of kindness. Often, the offer is made because the company sees a legal risk in how you were dismissed. If you have reported harassment, taken protected leave, or complained about your pay shortly before your dismissal, your claims could be worth more than the amount offered in the settlement.
Talk to Abney Law Before You Sign
A severance agreement can be a negotiation, even if it seems final. The terms can often be changed, and there is more room for questions than the signing deadline may suggest. Abney Law reviews severance agreements for workers in Kentucky and can help you determine if the release is fair, if a clause crosses the legal line, or if you have a valid claim. Contact Abney Law to schedule a review before your deadline passes.