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Negotiating Severance Agreements

severance agreement and release agreements California law
It's common for an employer to offer their employees a severance package upon termination, lay-off or even when an employee resigns. A severance package may include a lump some compensation, extended payroll and/or benefits, company stock, or a combination of some or all of the above items. Employers offer severance for two main reasons (except those situations where they are obligated to pay severance by contract): (1) to maintain a good will in the industry / reward the employee for his work and (lengthy) tenure with the company and (2) to make sure that the employer doesn't have to deal with any type of claims by that employee later - after he leaves the company. 

There are no laws that would obligate an employer to pay severance to anyone, regardless of how long they worked for the employer and how good of an employee they have been, except in those cases where there is a specific contract or written policy that states that a separated employee is entitled to a certain amount of severance pay per month or per year worked. Otherwise, it's completely up to the employer whether to offer any severance at all, and how much to offer. 

Typically, in order to receive the severance, an employee has to sign a "severance agreement", which will state in so many words that in exchange for the monetary benefit that you receive, you will waive any and all rights to any kind of claims and lawsuits that you might otherwise be able to bring. In other words, the employer gets a peace of mind of knowing that you are not going to sue them in exchange for providing you with the severance package.  The fact that your employer offers you severance doesn't mean that you have or don't have a strong claim against the employer, as more often than not a severance offer is just an economic / business decision by the company, and it is not reflective of the merits of your potential case. 

Once you sign the severance agreement, you will not be able to sue that employer for anything, unless there is evidence that the severance agreement is invalid, which is rare and requires strong evidence of duress, i.e. a showing that you were actually forced to sign an agreement or you didn't have a meaningful opportunity to review the document before signing it.

Generally, it's a good idea to have an experienced employment attorney review your severance agreement before you sign it for a number of reasons, including the following:

(a) helping you decide whether you are better off signing the severance agreement or, instead, bringing a claim against the employer,  by evaluating whether a wrongful termination or discrimination / retaliation case can be made;
(b) whether you should try to negotiate a higher severance based on the facts of your termination or have an attorney negotiate on your behalf;
(c) making sure that the document is drafted properly and fairly without imposing any draconian restrictions on you and your future career. 

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Law Office of Arkady Itkin

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Law Office of Arkady Itkin - San Francisco & Sacramento Injury and Employment Lawyer
We represent employees and employers in employment and wrongful termination cases, as well as victims of serious injuries in San Francisco, Oakland, Sacramento, San Jose, Palo Alto, San Mateo and throughout Northern California. We all represent businesses and start-ups in a wide range of business and employment issues and disputes. 


57 Post Street, Suite 812, San Francisco, CA 94104; Tel. (415) 295-4730; Fax. (415) 508-3474; [email protected]
  • Home
  • Employment Law
    • Wrongful Termination >
      • At-Will Employment
      • Termination After Unfair Warnings and Write-Ups
      • Union Grievance, Workers Comp and Wrongful Termination
      • Labor Code 970 Claims
      • Promissory Estoppel and Employment Contracts
      • Implied Contract Claims
    • Discrimination >
      • Proving Discrimination
      • Age Discrimination
      • Disability Discrimination >
        • Protected Disabilities
        • Medical Leave / Disability Accommodations
        • Job Reassignment As A Disability Accommodation
        • SSI Disability Benefits and Your Court Case
        • Sample Request for Reasonable Accommodation
      • Pregnancy Discrimination
      • Race Discrimination
      • Sample Discrimination Complaint
      • DFEH and EEOC Investigations
    • Retaliation >
      • How to Prove Retaliation
      • Dealing with Retaliation While Still Employed
      • Retaliation for Complaining
      • Whistleblower Retaliation
    • Harassment
    • Defamation at Workplace
    • Prof. License Defense
    • Leaves of Absence >
      • Medical Leave as Reasonable Accommodation
      • FMLA Entitlement and Reinstatement to Work
      • CFRA Leave
      • Employers' FMLA Notice Obligations
      • Paternity Leave (FMLA)
      • Sample FMLA Leave Request
    • Wages / Overtime Claims >
      • Wage Claims
      • Employee or Contractor
      • Exempt / Non-Exempt >
        • Admistrative Exemption
        • IT Support Specialists Compensation
        • Computer Professional Exemption from Overtime
        • Recruiters / Account Executives Exemption
        • Complaining About Being Misclassified
      • Vacation Pay / PTO
      • On-Call Time Compensation
      • Deductions fr. Commissions
    • Unempl. Benefits Appeals >
      • Tips for EDD Phone Interview
      • Unemployment Benefits Appeal Hearing Representation
      • CUIAB Hearing Tips
    • Employment Law Blog
    • For Employers
  • Personal Injury
    • Five Tips For Injury Cases
    • Slip-and-Fall Injuries
    • Assault and Battery
    • Recorded Statements
    • Repairing Your Vehicle
    • Unpaid Medical Bills
    • Injury Law Blog
    • Medical Malpractice
    • Police Excessive Force
  • Practice Areas
  • About
  • Results
  • Submit Case
  • Contact
  • Resources
    • Consultations
    • Workplace Rights Checklist
    • Deposition Tips
    • Mediation Tips
    • Effective Mediator
    • Suing Current Employer
    • Severance Agreements
    • Workplace Investigation
    • Arbitration
    • Statutes of Limitations
    • Healthy Litigation Mindset
    • Trial Tips
    • Working Remotely
    • How To Find The Right Lawyer For Your Case