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CALL FOR CASE EVALUATION - NO RECOVERY. NO FEE. 
Most severance agreements are more than an offer of additional compensation—they are legal contracts. In exchange for severance pay or benefits, employers typically ask employees to release legal claims and accept continuing obligations after their employment ends. While many provisions are standard, others may unnecessarily restrict your future employment, reduce your compensation, or require you to give up valuable legal rights.
Before signing, take a close look at the following provisions.
Virtually every severance agreement contains a release of claims. The question is how broad that release is.
By signing, you may waive claims for discrimination, harassment, retaliation, whistleblower retaliation, unpaid wages, wrongful termination, or other employment-related claims. In many cases, you are releasing claims you may not yet realize you have.
Before signing, make sure you understand exactly which claims are being released and whether the severance being offered fairly compensates you for giving up those rights.
Possible negotiation: Increase the severance payment or narrow the scope of the release.
Many agreements prohibit employees from making negative statements about the company. However, some agreements impose those restrictions only on the employee while allowing the employer and its representatives to say whatever they wish.
A one-sided provision can leave you unable to defend your professional reputation while providing no protection against negative comments from the company.
Possible negotiation: Make the non-disparagement obligation mutual so both parties are subject to the same restrictions.
It is reasonable for an employer to protect trade secrets and proprietary information. However, some severance agreements go much further by prohibiting employees from discussing the agreement itself or even the circumstances surrounding their departure.
Overly broad confidentiality provisions may create unnecessary uncertainty about what you can discuss with future employers, family members, financial advisors, or others.
Possible negotiation: Clarify what information must remain confidential and include appropriate exceptions.
One of the most common disputes involves compensation that has already been earned but has not yet been paid.
Depending on your compensation plan, the agreement may affect commissions, bonuses, incentive compensation, or deferred compensation. California law provides significant protections for earned wages, but determining what has been earned often requires a careful review of the governing compensation plan.
Possible negotiation: Confirm payment of all earned commissions, bonuses, and other compensation before signing.
California generally treats accrued vacation as earned wages that cannot be forfeited. Nevertheless, severance agreements sometimes create confusion regarding final wage payments, unused vacation, PTO balances, expense reimbursements, or other amounts owed at termination.
Before signing, verify that all compensation legally owed to you is being paid separately from the severance package.
Possible negotiation: Resolve any disputes regarding unpaid wages or accrued vacation before executing the agreement.
For employees receiving equity compensation, the value of stock options, restricted stock units (RSUs), or other equity may exceed the severance payment itself.
Many employees are surprised to learn that termination may accelerate exercise deadlines or affect vesting schedules. Missing an exercise deadline can result in the permanent loss of valuable equity.
Possible negotiation: Extend stock option exercise periods, accelerate vesting where appropriate, or clarify the treatment of outstanding equity awards.
California generally prohibits most employee non-compete agreements. Even so, severance agreements sometimes include broad restrictions relating to customers, confidential information, solicitation, or future competitive activities.
Although some provisions may ultimately be unenforceable, they can still create uncertainty and discourage future employment opportunities if not carefully drafted.
Possible negotiation: Narrow overly broad restrictions and remove provisions that exceed what California law permits.
Many severance agreements require former employees to cooperate with the employer in future litigation, investigations, or regulatory proceedings.
While some level of cooperation may be reasonable, these provisions should clearly define the scope of the obligation, reimbursement for expenses, reasonable notice requirements, and compensation for significant time commitments.
Possible negotiation: Limit cooperation obligations to reasonable requests and require reimbursement for time and expenses.
How your departure is described can be just as important as the amount of severance you receive.
Many agreements say nothing about employment references, leaving future inquiries entirely to the employer’s discretion. Others fail to specify whether your departure will be characterized as a resignation, layoff, or termination.
A negotiated reference policy or agreed-upon separation language can make future job searches significantly easier.
Possible negotiation: Include a neutral reference policy, an agreed reference letter, or mutually acceptable language describing your separation.
Many employers give employees only a short period to decide whether to accept a severance agreement. While business deadlines are common, rushing into a decision without understanding your rights can be costly.
If you are age 40 or older and are releasing age discrimination claims, federal law may provide additional protections, including minimum review periods and, in many cases, the right to revoke the agreement for a limited time after signing.
Before signing, make sure you understand every deadline that applies.
Possible negotiation: Request additional time to review the agreement with legal counsel before making a final decision.
A severance agreement is not simply a payroll document—it is a legal contract that can affect your finances, professional reputation, future employment opportunities, and legal rights long after your employment ends.
Every severance agreement represents a negotiation between an employer seeking certainty and an employee deciding whether the compensation offered is sufficient to justify giving up valuable legal rights. Before signing, make sure you understand exactly what you are receiving—and exactly what you are giving up.
As a California employment lawyer, I review severance agreements for employees throughout California, explain the legal consequences of each provision, and negotiate improved severance packages where appropriate. If you have received a severance agreement, contact my office before signing.