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Los Angeles Severance Agreement Attorney: Severance Negotiations Lawyer


What is a Severance Agreement, and Why Is My Employer Offering Me One?

While California law does not ordinarily require it, employers may voluntarily choose to offer severance pay to an employee who is being terminated.

Updated 2022

An employer may choose to do so as a show of gratitude to an especially valuable or long-term employee, without any strings attached.  More commonly, however, severance pay is offered to a terminating employee on the condition that the employee sign a severance agreement waiving certain legal rights against the employer and/or other third parties. 

A severance agreement is a contract between the employer and a departing employee, under which the employer provides the departing employee a certain amount of money or other benefits in exchange for a waiver and release of certain rights.  An employer may condition severance pay on a departing employee’s execution of a severance agreement in order to put to rest any potential claims and avoid future lawsuits against the company in connection with the departing employee’s employment or its termination.

In addition to providing for a final separating wage payment (or payments) to the terminating employee, an employment severance agreement may also include or address other employment benefits, such as continuing medical insurance coverage, or payment for accrued and available vacation or paid time-off (“PTO”).  In exchange for accepting the benefits specified by a severance agreement, however, a departing employee who signs such an agreement generally gives up his or her right to sue their former employer for wrongful termination of employment, unlawful discrimination, harassment or retaliation, defamation, and a variety of other potential legal claims.  A severance agreement may also prohibit a terminating employee from disclosing the employer’s trade secrets, making negative statements about the employer, and/or discussing the facts surrounding their termination or the severance agreement itself.

Because a severance agreement ordinarily includes a broad waiver and release of rights, it is very important to consult with an experienced employment law attorney before deciding whether to sign any such agreement.

What Rights Do I Have Under California Law Pertaining to Severance Agreements?

Severance agreements in California are contracts governed by California law, and can be negotiated and constructed creatively to meet the needs of both parties. Having said that, California law imposes some limitations on what an employer can require a departing employee to agree to as part of a severance agreement. Specifically, California law prohibits a severance agreement from:
  • Requiring a terminating employee to waive or release rights that cannot be released by agreement under California law, such as the right to file a lawsuit against the former employer for wage and hour violations;

  • Requiring a terminating employee to sign a severance agreement in order to receive wages they are already due and owed;

  • Requiring a terminating employee to refrain from reporting certain crimes committed by his or her former employer;

  • Requiring a terminating employee to refrain from reporting certain crimes committed by his or her former employer;

  • Requiring a terminating employee to refrain from applying for unemployment benefits.

In addition, if you are over the age of forty (40), your employer must allow you at least twenty-one (21) days to consider whether to sign any settlement agreement, and an additional seven (7) days in which to revoke your acceptance of a severance agreement after signing.

What Should I Consider Before Signing a Severance Agreement?

The decision to accept a severance agreement offered by your employer deserves careful consideration and should not be made lightly. Accepting a severance agreement can have far-reaching consequences, including obligations and restrictions that continue long after you and your employer have parted ways.

It is never in your best interest to accept a severance agreement unless you fully and completely understand all of its terms and conditions. Obtain a copy of any severance agreement proposed by your employer and thoroughly review it; if your employer makes a verbal severance offer, insist that it be put in writing. Take sufficient time to fully review and understand the proposed agreement, what rights it requires you to give up, and what obligations it requires you to assume going forward. If your employer asks you to make a decision quickly, ask for more time, and be cautious moving forward. Undue pressure to accept a severance proposal without sufficient time to fully consider it may be a sign that the agreement contains terms that would be unfavorable to you.

Consultation with an experienced employment lawyer is strongly recommended before you accept any severance proposal from your employer. Your attorney may be able to negotiate more favorable severance terms, such as a larger monetary payment to you, enhanced continuing employment benefits, or less burdensome obligations and restrictions. It is especially important to consult experienced employment counsel before accepting a settlement agreement if you believe your employer violated your legal rights during your employment. Accepting a severance package will almost always require you to give up any claims you may have against your employer for discrimination, harassment, unlawful retaliation, wrongful termination, and a broad variety of other legal violations, and the value of those claims may be far greater than what your employer is offering in severance.

Contact Labor Law PC for a Free Consultation

Danny Yadidsion and his experienced team of lawyers at Labor Law PC are dedicated to protecting the rights of California workers and ensuring that their voices are heard.  If you have been offered a severance agreement by your employer, we can assist you in evaluating that agreement and negotiating with your employer to make sure your rights are protected.  Our attorneys value and respect your privacy, and will work tirelessly to help you get the justice that you deserve.  Call us today at (877) 77-LABOR for a free consultation.     


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