Employers who pay out severance to their employees run certain risks that need to be considered beforehand. Some employers have learned the hard way that severance agreements aren't always the best course of action. Last year, the University of Oregon received bad press when it was discovered that former head coach Mike Bellotti received a substantial payout upon his departure.

More recently, the mayor of Cornelius, Oregon, was recalled by voters who were upset that his firing of a City Manager cost the city over $100,000 in severance payouts. Although these examples come from public employers who need to report their actions, private employers can still run into hot water when trying to sever employment relationships.