Understanding Severance Agreements in California: Don’t Sign Anything Until You Read This

By Lawrence Glasner, Employment Attorney  |  Glasner Law P.C.  |  Redding, CA

When your employer hands you a severance agreement, it can feel like a lifeline. You’ve just lost your job, you’re worried about your finances, and someone is offering you money. But that document you’re being asked to sign is not a gift — it’s a legal contract that may waive rights worth far more than what you’re being offered.

What Is a Severance Agreement?

A severance agreement (sometimes called a separation agreement or release of claims) is a contract between an employer and a departing employee. In exchange for severance pay or other benefits, the employee agrees to release the employer from legal liability — typically for any claims arising out of the employment relationship or its termination.

Common provisions in severance agreements include:

• General release of claims — waiving your right to sue for discrimination, wrongful termination, wage violations, harassment, and more.
• Non-disparagement clauses — prohibiting you from making negative statements about the company or its leadership.
• Confidentiality agreements — preventing you from disclosing the terms of the agreement or certain company information.
• Non-compete or non-solicitation clauses — restricting your ability to work for competitors or contact former clients.
• Cooperation clauses — requiring you to assist the company in future legal proceedings.

The ADEA and the 21/45-Day Rule

If you are 40 years of age or older, federal law — specifically the Older Workers Benefit Protection Act (OWBPA) — gives you important rights:

• You must be given at least 21 days to consider the agreement (or 45 days in a group layoff).
• You have 7 days after signing to revoke the agreement.
• The agreement must specifically advise you in writing to consult with an attorney.

Employers who fail to comply with these requirements may render the age-related waiver unenforceable — a technical but powerful protection that many employees never know they have.

Is Your Severance Offer Fair?

There is no California law requiring employers to pay severance. When they do offer it, the amount is entirely up to them — unless your employment contract, employee handbook, or company policy specifies otherwise. This means the first offer is rarely the final offer.

Factors that affect leverage in severance negotiations:

• The strength of any underlying legal claims — if your termination raises flags for discrimination or retaliation, your employer has more at stake.
• Your tenure and seniority — long-term employees often have more negotiating room.
• The breadth of what you’re being asked to release — the more rights you’re waiving, the more you should receive.
• Your specific damages — lost income, benefits, stock options, bonuses, and emotional distress all have value.

Non-Compete Clauses in California

California has among the strongest anti-non-compete laws in the nation. Under California Business and Professions Code Section 16600, non-compete clauses in employment agreements are generally void and unenforceable — even if you signed one. Recent amendments reinforced this protection and imposed new obligations on employers who attempt to enforce non-competes. If your severance agreement contains a non-compete clause, do not simply assume it applies to you.

Red Flags in Severance Agreements

• Extremely short signing windows — pressure to sign quickly is a negotiating tactic.
• Overly broad releases — language waiving “any and all claims of any kind” may include claims you don’t even know you have.
• Non-disparagement clauses without reciprocity — you’re silenced, but the company can say whatever it wants about you.
• Vague cooperation obligations that could demand significant time with no additional compensation.

Get a Legal Review Before You Sign

A severance agreement is a legal document with lasting consequences. Lawrence Glasner at Glasner Law P.C. has reviewed and negotiated hundreds of employment agreements on behalf of Northern California workers. He will tell you plainly what you’re being offered, whether it’s fair, and whether you have leverage to ask for more.

Schedule Your Free Consultation  |  (530) 688-8154  |  glasnermediation.com

Prior results do not guarantee a similar outcome. The information in this article is for general informational purposes only and does not constitute legal advice or create an attorney-client relationship.