A severance release does not buy your employer everything — Minnesota and federal law wall off several claims you cannot sign away

What is on the table at the exit meeting

A severance agreement is a purchase. The employer is buying a release; the money is the price. The only question worth asking is what the release reaches — and the answer is neither “everything” nor “nothing.” Minnesota and federal law each cut holes in what a private release can do.

Minnesota Human Rights Act claims: a 15-day right to rescind, and written notice of it

Minn. Stat. § 363A.31 does two separate things. Subdivision 1 kills forward-looking waivers outright:

Any provision, whether oral or written, of a lease, contract, or other agreement or instrument which purports to be a waiver by an individual of any right or remedy provided in this chapter is contrary to public policy and void if the waiver or release purports to waive claims arising out of acts or practices which occur after the execution of the waiver or release.

Subdivision 2 governs the backward-looking release you are actually being handed:

A waiver or release of rights or remedies secured by this chapter which purports to apply to claims arising out of acts or practices prior to, or concurrent with, the execution of the waiver or release may be rescinded within 15 calendar days of its execution, except that a waiver or release given in settlement of a claim filed with the department or with another administrative agency or judicial body is valid and final upon execution. A waiving or releasing party shall be informed in writing of the right to rescind the waiver or release.

The mechanics are not left to the parties. Subdivision 2 requires the rescission to be in writing and delivered “by hand, electronically with the receiving party’s consent, or by mail within the 15-day period,” and if by mail, postmarked within the period, properly addressed, and “sent by certified mail return receipt requested.” The checklist runs both ways: 15 calendar days is 15 days.

The revisor’s published note on the section adds one limit: “Subdivision 1 (formerly section 363.031) was found preempted by federal law with regard to arbitration agreements in Johnson v. Piper Jaffray, Inc., 530 N.W.2d 790 (Minn. 1995).”

Age claims: the federal windows

If the release covers a claim under the Age Discrimination in Employment Act, 29 U.S.C. § 626(f) sets minimum conditions. Section 626(f)(1) opens:

An individual may not waive any right or claim under this chapter unless the waiver is knowing and voluntary. Except as provided in paragraph (2), a waiver may not be considered knowing and voluntary unless at a minimum—

and lists eight requirements: the waiver must be written to be understood, must specifically refer to ADEA rights, must not purport to waive claims arising after execution, must be exchanged for consideration “in addition to anything of value to which the individual already is entitled,” must advise the individual in writing to consult an attorney, and —

(F)(i) the individual is given a period of at least 21 days within which to consider the agreement; or (ii) if a waiver is requested in connection with an exit incentive or other employment termination program offered to a group or class of employees, the individual is given a period of at least 45 days within which to consider the agreement;

(G) the agreement provides that for a period of at least 7 days following the execution of such agreement, the individual may revoke the agreement, and the agreement shall not become effective or enforceable until the revocation period has expired;

For a group program, subparagraph (H) adds a written disclosure of the class covered, the eligibility factors, the time limits, and “the job titles and ages of all individuals eligible or selected for the program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program.”

Section 626(f)(3) puts the burden on the employer: “the party asserting the validity of a waiver shall have the burden of proving in a court of competent jurisdiction that a waiver was knowing and voluntary pursuant to paragraph (1) or (2).” Section 626(f)(4) protects the agency channel: “No waiver agreement may affect the Commission’s rights and responsibilities to enforce this chapter. No waiver may be used to justify interfering with the protected right of an employee to file a charge or participate in an investigation or proceeding conducted by the Commission.”

In Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998), an employee signed a release, took $6,258 in installments, and sued under the ADEA. The release had given her 14 days to consider, no seven-day revocation period, and no specific reference to the ADEA. The Court held it could not bar the claim, and that keeping the money changed nothing:

Since Oubre’s release did not comply with the OWBPA’s stringent safeguards, it is unenforceable against her insofar as it purports to waive or release her ADEA claim. As a statutory matter, the release cannot bar her ADEA suit, irrespective of the validity of the contract as to other claims.

On the tender-back argument: “the employer cannot invoke the employee’s failure to tender back as a way of excusing its own failure to comply.” The Court did not say the money is kept free and clear — it noted that in later proceedings “courts may need to inquire whether the employer has claims for restitution, recoupment, or setoff against the employee, and these questions may be complex . . . .”

What a private release cannot reach at all

Unemployment. Minn. Stat. § 268.192, subd. 1 is categorical:

Any agreement by an individual to waive, release, or commute rights to unemployment benefits or any other rights under the Minnesota Unemployment Insurance Law is void.

The same subdivision makes it a misdemeanor for an employer to “in any manner obstruct or impede an application or continued request for unemployment benefits,” and subdivision 1a provides that an agreement trading a resignation or a withdrawn appeal for the employer’s promise not to contest benefits has no effect under the unemployment chapter.

Workers’ compensation. Minn. Stat. § 176.521, subd. 1(a) makes a settlement of a workers’ compensation claim valid only if it is written and signed by the parties and intervenors, and, “where one or more of the parties is not represented by an attorney, the commissioner or a compensation judge has approved the settlement and made an award thereon.” Under subdivision 2, even where both sides have lawyers, a settlement purporting to be a full, final, and complete settlement of medical compensation or rehabilitation “must be approved by the commissioner or a compensation judge.”

Wage claims. The Minnesota wage statute contains one sentence on the point, in § 177.27, subd. 8: “An agreement between the employee and the employer to work for less than the applicable wage is not a defense to the action.” Federal law contains a related mechanism in 29 U.S.C. § 216(c), under which the Secretary of Labor may supervise payment of unpaid minimum wages or overtime and “the agreement of any employee to accept such payment shall upon payment in full constitute a waiver by such employee” of the private right of action. Neither text states whether a purely private release, with no agency or court involvement, extinguishes an already-accrued wage claim. The Supreme Court answered that question for the federal statute in two steps, and answered it against the release. In Brooklyn Savings Bank v. O’Neil, 324 U.S. 697 (1945), where the release “was not given in settlement of a bona fide dispute between employer and employee,” id. at 703, the Court held that “to allow waiver of statutory wages by agreement would nullify the purposes of the Act,” and that the same policy considerations that forbid waiver of basic minimum and overtime wages “also prohibit waiver of the employee’s right to liquidated damages.” Id. at 707. One year later, in D. A. Schulte, Inc. v. Gangi, 328 U.S. 108 (1946), it closed the obvious gap: even a genuine dispute about coverage does not help, because “the remedy of liquidated damages cannot be bargained away by bona fide settlements of disputes over coverage.” Id. at 114. What the Court expressly did not decide is “the possibility of compromises in other situations . . . such as a dispute over the number of hours worked or the regular rate of employment.” Id. at 114–15. What Minnesota law does with a private release of an accrued claim under section 177.27 is a separate question, and no Minnesota appellate decision answering it was found.

Severance and unemployment benefits

Severance changes when benefits are paid. It does not defeat the claim.

Minn. Stat. § 268.085, subd. 3b applies to separation pay, severance pay, bonus pay, “or any other payments paid by an employer because of, upon, or after separation from employment,” and only if the payment is “considered wages under section 268.035, subdivision 29” or “subject to the Federal Insurance Contributions Act (FICA) tax.” Where it applies, the payment is allocated forward from the later of the separation date or the date the applicant first learned the employer would pay, over a number of weeks found by dividing the total by the applicant’s last level of regular weekly pay. For each of those weeks, if the allocated payment equals or exceeds the weekly benefit amount, there is no benefit that week; if it is less, the benefit is reduced by that amount.

Paragraph (b) forecloses the most common misreading:

The date the payment is actually made or received, or that an applicant must agree to a release of claims, does not affect the application of this paragraph.

One rule about how the money is labeled

Minn. Stat. § 181.141, enacted in 2023, is a single sentence:

In a sexual harassment or abuse settlement between an employer and an employee, when there is a financial settlement provided, the financial settlement cannot be provided as wages or severance pay to the employee regardless of whether the settlement includes a nondisclosure agreement.

The section governs characterization, not amount and not confidentiality. Whether a particular payment is then allocated against unemployment benefits still runs through the two triggers in § 268.085, subd. 3b — wages under § 268.035, subd. 29, or subject to FICA.

Currency

Revisor History lines: § 363A.31 ends at “1Sp2021 c 11 art 3 s 16”; § 268.192 at “2012 c 201 art 2 s 7”; § 181.141 at “2023 c 64 art 1 s 11”; § 268.085 at “2023 c 55 art 1 s 30.” In the revisor’s table of Minnesota Statutes affected by the 2026 Regular Session, the 2026 amendments in these chapters reached §§ 181.101, 181.211, 268.19, 268.193, 363A.02, 363A.07, 363A.08, and 363A.29. No section quoted on this page was amended in 2026.

This page describes the machinery. What a particular release covers, and whether a particular deadline has run, are questions about your document and your dates, and applying these statutes to them is not what this page does.