A California severance agreement can provide money or benefits after employment ends, but it often requires the employee to release valuable legal claims in return. Before signing, review the payment amount, final wages, claims being waived, confidentiality language, deadlines, benefits, and the circumstances surrounding your termination.
Do not evaluate the agreement based only on the severance number. The more important question may be What rights are you giving up in exchange?
California generally does not require an employer to provide severance pay simply because an employee is terminated. Severance may instead come from an employer policy, employment contract, severance plan, or negotiated separation agreement.
That makes true severance different from wages the employee has already earned.
Before evaluating the severance offer, determine whether the employer already owes you money independent of the agreement.
That may include:
California requires discharged employees to receive wages due at termination, including earned unused vacation. An employer must also pay undisputed wages without requiring the employee to sign a release.
Review California final paycheck law if your final wages are late or incomplete.
If your employer offers $10,000 in “severance,” for example, determine whether that amount is truly additional consideration or whether part of it is compensation you already earned.
Most severance agreements contain a general release.
The language may waive claims arising from your employment or termination, potentially including discrimination, harassment, retaliation, wrongful termination, wage-and-hour disputes, contract claims, and other causes of action.
That makes the circumstances before your termination important.
If you recently complained to HR, requested accommodation, took protected leave, reported illegal conduct, or challenged unpaid wages, consider whether there may be a claim you are releasing.
Employees who believe the termination itself may have been unlawful should review the rights discussed by a wrongful termination lawyer for California employees before treating the severance document as routine exit paperwork.
Many California severance agreements contain a waiver of Civil Code §1542.
Section 1542 generally protects claims that a person does not know or suspect exist when signing a general release and that would have materially affected the settlement if known.
Employers frequently ask employees to expressly waive this protection so the release covers certain unknown claims as well.
If you see California Civil Code Section 1542 in the agreement, understand that it is not boilerplate to ignore. It can materially broaden what you are releasing.
For separation agreements covered by California Government Code §12964.5, the employer must notify the employee of the right to consult an attorney and provide a reasonable period of at least five business days to do so.
An employee may voluntarily sign sooner when the decision is known and voluntary and is not induced through prohibited pressure such as a threat to withdraw or alter the offer before the review period expires. The statute contains an exception for certain negotiated settlements resolving underlying claims.
A demand that you sign immediately should therefore be examined carefully.
Federal law adds additional requirements when an employee age 40 or older is asked to waive an Age Discrimination in Employment Act claim.
Under the Older Workers Benefit Protection Act, an individual generally must receive at least 21 days to consider an ADEA waiver and seven days after signing to revoke it.
For certain group termination or exit-incentive programs, the consideration period generally increases to 45 days, along with additional disclosure requirements.
The seven-day revocation period cannot be shortened.
California restricts how far separation agreements can go in silencing employees.
An agreement generally cannot prohibit an employee from discussing information about workplace conduct the employee reasonably believes was unlawful, such as discrimination, harassment or retaliation. When a non-disparagement or similar clause restricts discussion of workplace conditions, California requires protective language preserving that right.
The law does, however, permit confidentiality concerning the amount paid in a severance agreement and allows protection of legitimate trade secrets and proprietary information.
Read these provisions carefully instead of assuming every confidentiality restriction means the same thing.
Look backward before signing forward-looking promises.
Ask:
A sudden change in documented performance may be worth reviewing before releasing potential claims.
If this sequence occurred, compare it with performance improvement plan retaliation in California and preserve the chronology before access to company systems disappears.
Severance agreements may address more than money.
Review provisions concerning:
If the agreement resolves an existing employment dispute, California also places restrictions on certain no-rehire provisions involving an aggrieved person, subject to statutory exceptions.
A severance offer is not necessarily nonnegotiable.
Employees may ask for changes to compensation, payment timing, benefit continuation, reference language, confidentiality terms, release scope, or other provisions.
Whether the employer agrees depends on the circumstances and bargaining leverage.
Potential claims may affect that leverage. For example, documented retaliation, unpaid wages, discrimination, harassment, commissions, or inconsistent termination reasons may deserve evaluation before the employee releases them for a fixed payment.
Compare the agreement with the underlying employment record.
Useful documents can include:
A California personnel file request may also help employees obtain performance and disciplinary records before evaluating disputed termination circumstances.
The Ghol Firm in Beverly Hills represents California employees in wrongful termination, retaliation, wage-and-hour, and related employment disputes.
A California severance agreement should be reviewed as an exchange: what additional money or benefits are you receiving, and what rights are you giving up?
Separate severance from wages already owed, understand the release and any §1542 waiver, check the deadline, review confidentiality and non-disparagement provisions, and consider the events leading to termination.
Employees age 40 or older should also pay particular attention to federal ADEA/OWBPA requirements.
Most importantly, understand the agreement before signing it. Once a valid release becomes effective, claims covered by that release may be difficult or impossible to pursue later.
Generally, no. California does not ordinarily require severance simply because employment ends, although a contract, policy, benefit plan, or negotiated agreement may create rights to severance.
An employer cannot require a release as a condition of receiving undisputed wages already due. Final wages and true severance consideration should therefore be analyzed separately.
For separation agreements covered by Government Code §12964.5, employees generally must receive at least five business days and notice of their right to consult an attorney, subject to statutory exceptions.
It concerns unknown claims. Section 1542 generally prevents a general release from automatically covering qualifying claims the releasing person does not know or suspect exist, unless that protection is validly waived.
When an ADEA waiver is requested, employees aged 40 or older generally receive at least 21 days to consider an individual agreement, or 45 days in certain group programs, plus seven days to revoke after signing.
California generally prohibits separation-agreement provisions that prevent disclosure of information about unlawful workplace acts, including reasonably believed harassment, discrimination or retaliation.
If you reported illegal conduct and were fired, demoted, written up, suspended, or pressured to resign, contact The Ghol Firm for a free consultation. No fees unless we win.
