Leaving a job can be challenging — especially if you are not able to leave the position on your own terms.
The period between one job and another can be financially stressful for any person.
A severance package can help ease this transition.
While California employers are generally not required to offer their workers severance pay, there are many reasons why both parties might benefit from such an agreement.
In this article, our employment law attorneys provide an overview of the most important things that workers need to know about severance agreements in California.
California Severance Agreement California: The Basics
A severance agreement is a contract between an employer and an employee.
It governs the rights and duties of each party in the event that an employee is terminated from their position.
Severance agreements may be signed when an employee is first hired, or they may be signed at the time an employee is terminated.
Generally, employees receive payment or other financial benefits when they sign this type of agreement.
In return, employees are often required to give up their ability to bring a wrongful termination lawsuit.
Most California Employees are Not Guaranteed Severance Pay
Employees are generally not guaranteed severance pay under state or federal labor laws.
As an example, the Fair Labor Standards Act (FLSA) does not require employers to offer severance pay.
It is crucial that California workers understand why employers offer severance packages at all. Companies get a benefit in return for offering severance pay.
Most importantly, the terminated employee will typically release all potential claims against the company.
Severance Pay Agreements in California Can Be Negotiated
Before signing a severance pay agreement in California, employees should be certain that they are receiving fair benefits. They should also make sure that they understand the full extent of their rights and their obligations under the deal.
Among other things, a severance agreement may require an employee to:
- Give up their ability to bring a wrongful termination claim against the company;
- Agree to an overall confidentiality clause;
- Sign a non-disparagement agreement; and
- Agree not to seek reemployment.
If you are considering accepting severance pay, it is imperative that you ensure that the terms are fair and acceptable to you.
These agreements can often be negotiated.
They should always be reviewed by a qualified employment lawyer. If you believe that you have a wrongful termination claim, you should consult with an attorney before signing your severance agreement.
In addition, if you are having any trouble obtaining severance benefits that are owed to you, it is crucial that you seek immediate legal assistance.
Get Help From Our Experienced California Severance Pay Lawyers
At Workplace Rights Law Group LLP, our top-rated employment lawyers have extensive experience drafting, negotiating, reviewing, and litigating severance package agreements in California.
With offices in Riverside and Glendale, we serve communities all over Southern California.
What is the Standard Severance Package in California?
There is no standard for severance packages in California. However, there are many provisions you can expect to see.
Because there is generally no mandatory severance pay law in California, employers can choose how much to compensate you for the termination of your employment.
An employer may choose to give you one to two weeks’ pay for every year of your service or a percentage of your salary as parting compensation.
There is no required or magic formula to determine the amount you should receive; you just need to decide whether what your employer is offering is worth what they are asking you to give up in exchange.
In exchange for severance pay, your employer will likely require you to waive several of your legal rights.
Your employer might also temporarily limit your subsequent work options in exchange for a severance payment.
Are Severance Agreements Enforceable in California?
Your employer is within its rights to offer you a severance agreement.
In general, severance agreements are enforceable, but there are certain terms courts refuse to (or cannot) enforce in severance agreements, including:
- Terms that require terminated employees to waive their right to take legal action to recover unpaid wages;
- Terms that require terminated employees to engage in illegal activities;
- Terms that forbid a terminated employee from testifying in criminal proceedings or proceedings regarding sexual harassment;
- Terms that forbid a terminated employee from taking legal action against an employer’s willful or criminal misconduct; and
- Terms that improperly prevent a terminated employee from finding other work.
You should always have an employment law attorney review a severance agreement before you sign it.
And if a severance agreement you signed contains unenforceable terms, the court can decide to remove just that unenforceable term or declare the entire contract void.
A severance agreement is also unenforceable if your employer uses fraud, coercion, or duress to get you to sign it.
This means that your employer uses threats, undue pressure, or significant lies to convince you to sign a severance agreement.