{"id":5069,"date":"2025-09-12T16:47:36","date_gmt":"2025-09-12T16:47:36","guid":{"rendered":"https:\/\/shegerianconniff.com\/?p=5069"},"modified":"2025-09-12T16:47:36","modified_gmt":"2025-09-12T16:47:36","slug":"severance-agreements-what-employees-should-look-out-for-before-signing","status":"publish","type":"post","link":"https:\/\/shegerianconniff.com\/dev\/severance-agreements-what-employees-should-look-out-for-before-signing\/","title":{"rendered":"Severance Agreements: What Employees Should Look Out For Before Signing"},"content":{"rendered":"

When an employee\u2019s position within a company ends, severance agreements are signed before the employee receives any severance pay. These legal agreements are meant to protect the company from future legal claims, but they can be detrimental if you don\u2019t know what you\u2019re signing.<\/span><\/p>\n

California employment laws<\/a> do not require companies to offer severance pay. Other rules in place dictate when you must receive your final pay. There are also WARN Act rules that determine how much notice you\u2019re given before your job is terminated and if you receive severance pay.<\/span><\/p>\n

Areas of an Agreement to Carefully Examine<\/span><\/h3>\n

When you\u2019re given a severance agreement to sign, look specifically for clauses related to these issues.<\/span><\/p>\n

1. Non-Compete Clauses<\/span><\/p>\n

Non-compete clauses<\/a> are designed to keep workers from going to work for the competition. California strives for employee-friendly policies. As a result, California laws make most non-compete clauses illegal.\u00a0<\/span><\/p>\n

If there is a non-compete, they\u2019re not enforceable except for limited exceptions allowed with the sale of your interests in a business or partnership. If an employer demands that you sign a non-compete, talk to an attorney. If an employer tries to enforce a non-compete and the above exceptions don\u2019t apply, you can sue.<\/span><\/p>\n

2. Non-Disclosure, Confidentiality, and Non-Disparagement Clauses<\/span><\/p>\n

If you sign the agreement and there is a non-disclosure clause, it\u2019s important that it is fair and doesn\u2019t break any employment laws.<\/span><\/p>\n

SB 331 is California\u2019s law regarding gag orders. If you know of any workplace discrimination or harassment claims and are told to sign a disclosure preventing you from ever talking about it, it\u2019s a violation of SB 331. A company cannot retaliate against you for speaking out.<\/span><\/p>\n

Confidentiality clauses are only allowed if the information you\u2019re being asked to never disclose follows the law. You might be asked to never share trade secrets. That\u2019s allowed.\u00a0<\/span><\/p>\n

You may be asked to never say anything negative about the company. Non-disparagement clauses are allowed as long as the things being shared aren\u2019t related to workplace violations like discrimination, harassment, or retaliation.<\/span><\/p>\n

3. Release of Claims<\/span><\/p>\n

In a severance agreement, the employer asks you to give up your right to sue for several reasons. You cannot waive your right to collect workers\u2019 compensation or unemployment. If you\u2019re asked to, that\u2019s a violation of your rights. You also cannot sign a release of claims for things you\u2019re unaware of at the time you sign it.\u00a0<\/span><\/p>\n

For example, you sign a severance agreement that waives your rights to sue for age discrimination. Six months later, a former coworker informs you that the employer is being sued for age discrimination, and some of the evidence points to the employer\u2019s admission that you were terminated because of your age. You were unaware when you signed the severance agreement and waived your rights. The release of claims protects.<\/span><\/p>\n

4. Severance Pay and Benefits<\/span><\/p>\n

Is the severance pay<\/a> fair? Is it going to cover your expenses using reasonable estimations for how long it will take to find a new job? The agreement should clearly state if taxes and other withholdings are going to be taken from the severance pay and whether the payment is coming as a lump sum or in installments.<\/span><\/p>\n

Do you still receive your key employment benefits? Will you keep your health insurance for a specified period or time, or are you only extended COBRA coverage? Who pays for that COBRA coverage? Is your employer going to help, or do you have to pay the full amount on your own?<\/span><\/p>\n

Also look at benefits like dental and life insurance, 401k and pensions, bonuses, and stocks. Make sure you\u2019re not losing a lot if the company doesn\u2019t extend those benefits after you leave.<\/span><\/p>\n

Understanding the WARN Act<\/span><\/h3>\n

If your job is ending as part of a mass layoff, your severance agreement must consider the rules of the WARN Act, too. The Worker Adjustment and Retraining Notification (WARN) applies to any company that has at least 75 full- or part-time employees.\u00a0<\/span><\/p>\n

There are rules a company must follow. Any employees who have been with the company for at least six of the past 12 months need to be provided with at least 30 days of notice of a layoff of 50 or more workers or relocation of at least 100 miles. If the relocation involves a call center moving to a new country, 30 days must be provided, no matter how many workers are affected.<\/span><\/p>\n

If you\u2019re asked to sign a severance agreement with your job ending before 30 days is up, it\u2019s a violation of the WARN Act. Penalties of up to $500 per day are possible. The penalties are calculated using your final pay rate or an average rate of your past three years\u2019 paychecks.\u00a0<\/span><\/p>\n

Did you accrue any medical expenses after your position was terminated? If so, your employer is liable for the cost that your company\u2019s health insurance would have usually covered. This rule covers up to 60 days after your termination or 50% of the amount of time you were employed with the company, whichever number is smaller.<\/span><\/p>\n

Don\u2019t sign a severance agreement that waives your rights to the protections the WARN Act provides. If you are asked to sign agreements waiving your right to have health costs covered after a mass layoff or waiving your right to 30 days\u2019 notice, don\u2019t. Talk to an employment law specialist in California.<\/span><\/p>\n

Steps to Take Before You Sign<\/span><\/h3>\n

Before you sign a severance agreement, make sure you carefully read it. If anything is hard to understand or doesn\u2019t seem fair, consult an expert.<\/span><\/p>\n

California laws provide you with a minimum of five business days before you must act. There are a few extensions.<\/span><\/p>\n