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Don’t Sign a Severance Agreement Until You’ve Talked to an Attorney

When you’re terminated, it’s a shock. Some companies have recently made the news after abrupt layoffs left workers without an income or benefits effective immediately. United Furniture Industries laid off 2,700 workers via a text message. Amazon announced plans to lay off more than 10,000. Meta is planning to lay off over 11,000. Twitter laid off half of its workforce.

A severance agreement is a contract you’re asked to sign when you’re terminated from your current job. Usually, it covers offers like receiving X amount of pay for each year you’ve been with the company. To get that money, however, you must waive your rights to do things like sue for illegal termination or to speak to the media about an abrupt termination that left you reeling.

Never sign a severance agreement until you’ve talked to an attorney. You could be agreeing to protect the company even though they know what they did was shady or illegal. Here are your rights when it comes to being terminated from a job.

Make Sure Your Termination Was Lawful

Is your termination even legal? If it was abrupt and unexpected, it likely violated the WARN Act. The Federal WARN Act requires for-profit companies with 100 or more workers to give at least 60 days of advance written notice before a mass layoff where at least 50 employees and 1/3 of the workforce are affected. It’s also required if 500+ employees at one site are terminated during a 90-day timeframe.

Companies that violate the WARN Act have to provide at least 60 days of back pay to each eligible employee. California’s WARN Act also requires the employer to cover up to 60 days of employee benefits like health and dental insurance. Civil penalties of $500 per day are also possible.

If you faced unexpected medical bills due to the unexpected layoff and loss of insurance, your employer is responsible for your medical expenses.

Immediately Sign Up for Protections

When you’ve been laid off, you could qualify for COBRA benefits and unemployment. The only things that would keep you from being able to collect unemployment benefits are your refusal to accept suitable work, being fired for misconduct, quitting without good reason, or not having employee wages for the last 18 months.

If you’ve been terminated during a mass layoff, you are eligible for unemployment. Unemployment pay is based on your highest wages accrued in a quarter. Benefits range from $40 to $450 per week. There’s a benefits table you can use to determine how much you’ll receive.

Unemployment benefits provide up to 26 weeks of unemployment pay. Make sure you’re applying for jobs that you qualify for in the meantime. You don’t want to run out of unemployment pay and still not have found a suitable job.

Cal-COBRA is a California law that allows workers to keep their group health insurance plan when their job is terminated for reasons other than misconduct. As long as your employer has at least two employees, Cal-COBRA is possible. Small employers with 2 to 19 workers need to provide Cal-COBRA for up to 36 months. Employers with 20 or more workers have to meet the 18 months of Federal COBRA and then an additional 18 months of Cal-COBRA are available.

One thing that’s important to know is that your COBRA coverage is going to be more expensive in many cases. You’ll be paying the amount you were paying plus your employer’s contribution. It may be cheaper to look into marketplace insurance.

Collect Your Final Paycheck When You’re Terminated

California law (Labor Code § 201) requires employers to pay final wages at the time of termination. The wages must include unused vacation or personal time, but it doesn’t have to include sick leave.

Your final paycheck has to be handed to you at the place where you’re terminated. If you get a text message or are fired from your job online, check if your final paycheck has been automatically deposited to your bank. If not, ask where it is. You’re due that money immediately.

If you are not given your final wages, even if the company disputes what you’re owed, they are in violation of California laws. Your employer faces penalties of up to 30 days of extra pay. (The number of days the payment is late times your daily wage.) If there is a dispute about how much you’re owed, your employer still must pay you the amount that’s not in dispute. They cannot withhold the entire payment until the matter is settled.

Rules Involving Severance Agreements Changed in 2021

In 2021, Governor Newsom signed the “Silenced No More Act.” This act changed several things about severance agreements. First, employees have at least five days to consider a severance agreement. If your employer is demanding you sign a severance agreement before you collect your final paycheck that same day, they cannot do that. You have a minimum of five days to read it over and talk to an attorney.

That’s another change. Your employer has to make it clear that you have the right to consult an attorney. They cannot say if you talk to a lawyer, the severance agreement is voided.

You cannot be silenced if you know about unlawful workplace behaviors. A severance agreement cannot require you to stay silent about discriminatory practices unless it’s required through a court settlement.

You also do not have to sign non disparagement provisions that silence you into talking about conduct you feel is illegal or discriminatory. Severance agreements can include terminology that protects a company’s trade secrets or confidential information that is not related to unlawful acts in the workplace. And, they can require you to stay silent about the amount of money offered in a severance agreement.

Seek an Attorney’s Legal Insight

If you’re being asked to sign a severance agreement, consult with an attorney first. Don’t sign a thing until you’ve had a lawyer look it over. A severance agreement is often drafted to protect your employer, and that’s fine, but it should also protect your rights.

Does your severance agreement limit what your HR team can say about you? Does it protect you from future lawsuits if they decide you’ve broken a rule in some way? Is it asking you to not work for a similar company for the next few years? If it’s limiting where you can work, there’s a problem.

Non-compete clauses are common, but that doesn’t mean they’re right or even legal. These clauses are not legal or enforceable in California. Some employers still try to get employees to sign these non-compete clauses in employee contracts and severance agreements. They’re especially common in lower-paying jobs. Don’t sign one. If you did, the California Attorney General asks workers to report them.

Shegerian Conniff’s employment law specialists are here to help you understand your rights. We’ll look over your severance agreement and let you know if it’s in your best interests to sign it. If not, we’ll discuss the possible violations and reasons you shouldn’t sign. Schedule an appointment online or by phone at 310-322-7500. The attorneys at Shegerian Conniff are available 24/7 and are happy to schedule a free, confidential virtual consultation if that works best for you.

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