Attorney Advice |
July 31, 2021

California Severance Agreement Requirements

Regardless of whether or not you are leaving a job on your own terms, the process can be challenging, disheartening, and stressful. Often to make having to fire or lay off someone a less stressful situation for the employee involved, a company will offer a severance agreement. Most people are thankful when they receive a severance package as it helps them transition from one job to the next without suffering extreme financial burdens. 

However, it is still important to note the severance agreement requirements. You also need to be as informed as possible about what severance packages are and the legalities associated with them. A California severance pay lawyer can help you understand your severance package contract before you waive away your rights. At Minnis & Smallets, we strive to help our clients understand their severance package agreements so that they are not taken advantage of by their employers. 

What Is A Severance Agreement?

In simple terms, a severance agreement is a contract that an employer might ask an employee to sign if they are terminating the employee’s position. Usually, a severance agreement will offer an employee a certain amount of money, but the employee will have to waive or give up certain rights. 

In California, severance agreements are not compulsory, but many employers choose to use them. This is because California is a state that has laws that allow employees to sue their employers for a multitude of legal violations. Often the best way for employers to negate potential workplace lawsuits is to offer severance agreements. 

Common Concerns About Severance Agreements

It’s important for you to always keep in mind that in most instances, severance agreements are legally valid and binding and that a court will uphold them if the contract was entered into voluntarily. That’s why it’s crucial to discuss your severance agreement with an attorney before signing it, as your employer could be getting a better deal. 

In a severance agreement in California, only claims for civil violations and not crimes can be legally waived. A few of the most commonly waived legal rights in California severance agreements include:

  • Non-Disclosure Agreement: This provision forbids workers from exposing the employer’s confidential information, such as trade secrets. The clauses tend to be excessively broad, which might complicate the employee’s future.
  • Non-Complete Agreement: This is a clause in a contract that makes an employee agree not to work for a rival or to establish their own business. Despite the fact that these agreements are largely difficult to enforce in California, companies may nevertheless attempt to persuade employees to sign them to limit future opportunities.
  • Waiving the Right to Sue: Severance agreements often contain a clause that prevents an employee from filing a legal claim against the company. This means that the employer may avoid liability if accused of harassment, discrimination and missed wages, among other things.
  • Non-Disparagement Agreement: Some severance agreements require employees to pledge not to speak against the company on social media, in public or even to their loved ones.

Due to the above, signing a severance agreement may not always be the right decision. Before signing anything, review the documents alongside a trusted attorney.

The New Requirements For California Severance Agreements

In January of 2019, new laws and requirements came into effect that affect severance agreements in California. We have listed below the important requirements you should note before entering into a severance agreement with your employer. 

  • Waiver Language Amended In Civil Code 1542: There were slight changes made to the language in section 1542 of the civil code. The changes were made to the specific wording that needs to be quoted in release agreements. Employees can now retain the right to bring claims against their employers if it surrounds an issue they did not know of when signing the severance agreement. However, employees can only do this if no reference cites 1542 of the civil code in their severance agreement. 
  • Employees Are Allowed To Testify In Official Proceedings: Section 1670.11 was added to the California civil code. This section prohibits language that bars employees from testifying in legislative, administrative, or judicial proceedings concerning alleged criminal conduct or sexual harassment on the part of the other party to the severance agreement.
  • Employees Are Allowed To Disclose Certain Factual Information: Severance agreements can no longer prevent the disclosure of factual information related to a claim filed in a civil or administrative action regarding sexual harassment, harassment or discrimination based on sex, failure to prevent harassment or discrimination based on sex,  retaliation for reporting harassment or discrimination based on sex, or sexual assault.

Get In Touch With A California Severance Pay Lawyer Today

Severance agreements can be incredibly complex and often have hidden clauses that might not make much sense to those without legal knowledge. That’s why it’s crucial you consider contacting a California severance pay attorney. At Minnis & Smallets, we have years of experience reviewing severance agreements. Should you want to understand your severance agreement or ensure your rights are not being violated, you should consider contacting us