Terminations go wrong in the last two days more often than in the decision itself. Final pay, and whether you get a signed release for the money you hand over, is where a severance agreement in Pennsylvania or New Jersey earns its keep.
The decision is usually defensible. What creates the claim is the exit — a final paycheck that’s short or late, a severance payment made out of decency with nothing signed in return, a manager who improvises an explanation, or a laptop and a customer list that walk out the door.
Most of that is process, and process is fixable in advance.
Final pay is not optional and not flexible
Pennsylvania and New Jersey both have wage payment laws that dictate when a departing employee has to be paid, and both allow for penalties and attorney’s fees on top of the wages owed. That last part is why a small dispute over a few hundred dollars turns into a real problem: the fee-shifting makes it worth someone’s time to pursue.
A few things that are commonly gotten wrong:
Timing. Don’t assume you can hold the last check until the laptop comes back. Withholding earned wages to force the return of property is a separate problem from the property dispute.
Deductions. What you can subtract from a final check is narrower than most employers think — an unreturned laptop, a cash advance, a training cost, damage to a vehicle. Get the specific rule before you deduct anything, and get authorization in writing well before the termination, not on the way out.
Accrued PTO. Whether unused vacation gets paid out depends on your state and, importantly, on what your own handbook and policies say. An employer with no obligation under state law can still create one by promising a payout in writing. This is the single most common place a handbook creates a liability nobody intended.
Commissions and bonuses. If someone closed the deal and left before it paid, is that earned? Your plan document should answer it. If it doesn’t, the answer gets decided later by someone who isn’t you.
A severance agreement in Pennsylvania is a purchase, not a gift
You generally don’t owe severance unless you promised it — in a contract, a handbook, or a consistent practice you’ve established. So when you pay it, you should be buying something.
What you’re buying is a release: the employee’s agreement not to sue you. A severance payment made without a signed release is money spent for nothing. It happens constantly, usually out of genuine goodwill, and it’s pure loss.
Pay severance when: the facts are messy, the employee is in a protected category and could construct a story, they’ve complained about something recently, there’s a non-compete or confidentiality obligation you want reaffirmed, they hold relationships or information that matter, or you simply want the matter closed with certainty.
You may not need it when: the conduct is clearly documented, the employee is short-tenured, and there’s no complaint history. Even then, weigh the cost of a modest payment against the cost of defending a claim you’d win — defending it is rarely cheap.
The release has real requirements
This is the part people try to do with a template and shouldn’t.
Consideration. The release has to be paid for with something the employee wasn’t already entitled to. Wages they already earned don’t count. Neither does accrued PTO you already owed. If you’re just paying what you owe, you haven’t bought a release.
Age discrimination claims have their own rules. Federal law imposes specific requirements when you ask an employee 40 or older to waive age claims — including a period to consider the agreement, a period to revoke it after signing, written advice to consult a lawyer, and additional disclosures if the termination is part of a group. Get these wrong and the age waiver can fail while you’ve already paid. If a group reduction is involved, this needs real attention.
Some claims can’t be released. Workers’ compensation, unemployment, and the right to file a charge with or cooperate with an agency generally survive whatever the agreement says. A release that purports to bar an employee from talking to a government agency can itself be a problem. Write around this rather than pretending it isn’t so.
Confidentiality and non-disparagement clauses have gotten narrower. Broad language that would stop an employee from discussing their own working conditions or wages has drawn increasing scrutiny in recent years. Language that was standard practice a decade ago is worth a fresh look.
Restrictive covenants. If you want a non-compete or non-solicit to hold up post-separation, the separation agreement is where you reaffirm it — and where you find out whether the original was enforceable at all.
The mechanics of the day itself
- Have the final numbers ready. Wages, PTO, expenses, commissions, the last day of benefits coverage, and what continuation costs.
- Say less, not more. State the decision, keep it consistent with what’s documented, and don’t negotiate the reasoning in the room. Improvised explanations become the thing that gets quoted back.
- Two people present. One to talk, one to witness.
- Handle access first. Email, systems, cloud accounts, building access — coordinated to the conversation, not left for later that week.
- Property and information. List what’s out there, including anything on a personal device or in a personal account, and get it acknowledged in writing.
- Write the confirming letter the same day. Effective date, final pay, benefits, what’s enclosed, and the deadline if there’s a release to consider.
- Don’t oversell the reference. Decide the policy before you’re asked, and keep it the same for everyone.
- Expect the unemployment claim. Contesting it is a separate decision with its own consequences, including creating a record. Think about it before you react.
The pattern we see most
An employer decides to part ways with someone who hasn’t worked out. Wanting to do right by them, they offer four weeks’ pay. There’s no agreement — just a check and a handshake, because putting paper in front of someone felt cold.
Ten weeks later a demand letter arrives. The four weeks bought nothing. Worse, it now reads as an admission that the company thought it had a problem.
The version where this ends differently is the same conversation, the same four weeks, and one document. The cost difference is a couple of hours of legal time.
What to do next
If a termination is coming, the sequence worth following is: confirm what’s actually owed and when, decide whether severance is warranted, and if it is, have the release drafted before the conversation rather than after. Reverse that order and you lose most of the protection.
Holmes Business Law drafts severance agreements for Pennsylvania and New Jersey employers and advises on the rest of the separation — final pay, releases, restrictive covenants, and the documentation that should exist before the decision gets made. Clients on a GC subscription call us before the conversation instead of after it, which is the whole point.
