Severance Agreements in California

Severance Agreements in California

30 septembre 2022

Severance Agreements in California: What You Need to Know

A severance agreement is a legally binding document between an employer and employee that outlines the terms and conditions of the employee`s departure from the company. It serves as a way to provide employees with a financial cushion and additional benefits after they leave their job. In California, there are specific rules and regulations surrounding severance agreements that both employers and employees should understand.

Severance Pay

Severance pay is not required by law in California. However, some employers do offer it as a way to compensate employees for the loss of their job. If an employer does offer severance pay, they must comply with California`s wage and hour laws, which require that all wages owed to an employee be paid upon termination.

Severance pay is typically based on the length of an employee`s tenure with the company. In California, the maximum amount of severance pay that an employee can receive is one week of pay for every year that they worked for the company.

Waiver of Rights

One of the most important aspects of a severance agreement is the inclusion of a waiver of rights clause. This clause prohibits the employee from filing any legal claims against the employer in the future. It is important to note that employees in California have certain rights that cannot be waived, such as the right to file a workers` compensation claim.

Discrimination and Retaliation Claims

Severance agreements cannot be used to prevent employees from filing discrimination or retaliation claims. The California Fair Employment and Housing Act prohibits employers from discriminating against employees on the basis of race, gender, age, religion, or disability. Retaliation against an employee for filing a discrimination claim is also illegal.

If an employee believes that they have been discriminated against or retaliated against, they should not sign a severance agreement until they have consulted with an attorney.

Reviewing a Severance Agreement

It is important for employees to carefully review a severance agreement before signing it. They should ensure that they understand all of the terms and conditions, including any non-compete or non-disclosure clauses. Employees should also make sure that they are receiving fair compensation for their departure and that they are not waiving any of their legal rights.

Employers should also take care when creating a severance agreement. They should ensure that the agreement complies with all California laws and regulations and that it is fair to the employee. Employers should also be prepared to negotiate with employees over the terms of the agreement.


Severance agreements can provide a safety net for employees who are leaving their job. However, both employers and employees must understand the specific rules and regulations surrounding severance agreements in California. If you are considering a severance agreement, it is important to consult with an attorney to ensure that your rights are protected.

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