Am I required to sign a severance agreement in California? What are the laws behind this?

Question:  I was recently terminated from my job in California. Upon termination, my employer offered me severance pay, but said I would have to sign an agreement to receive it. Isn’t severance pay required, or do I have to sign this agreement?

Response: Under California law, employers do not have to provide severance pay to a departing employee. When employers do provide severance pay under a written or oral agreement, this is a legally binding contract between you and the employer. Such agreements are subject to all federal or state laws, as well as general contract laws. Most employers these days do not provide or guarantee any severance pay.

Nowadays, the typical severance pay offered to employees is given in exchange for an employee signing a full release of all potential known or unknown claims against the employer. You must be careful in entering such contracts, as they are legally binding and will not allow you to assert any future claim against the employer, regardless of the claim.

Some severance pay is also tied into agreements where employees cannot work in a specific field or industry. These non-compete agreements are typically made before employment begins, but nevertheless can be offered post-employment in exchange for money. Although these agreements cannot typically be of infinite duration, they can restrict you from working in a similar industry or field from a few months to several years. It is important to read thru such agreements, and understand the rights you are giving up.

Answered by Bert Gonzalez

Additional Resources:

• CA Employment Laws
• Employers Benefits
  
• Sample Employment Agreement
  

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