Understanding California Severance Pay

what is severance pay

Have you been terminated from your job and are wondering whether your employer is giving you everything you’re entitled to?

Have you heard about severance pay and wondered what it is? How is severance pay calculated?

Read on to learn more about severance pay laws in California.

What Is Severance Pay?

Upon termination of your employment, you may be entitled to severance pay, meaning you may receive some continuing compensation.

Severance pay may be part of a larger severance package, which is a group of benefits an employer provides to certain employees upon the termination of their employment.

Other benefits that a severance package may contain include an employer paying out accrued vacation days or reimbursing certain business expenses.

Are Employers Required to Provide Severance Pay?

As a general rule, employers are not required to give severance pay to departing employees.

Of course, this begs the question, Why would an employer provide a severance package to someone who is leaving the company?

The answer is that, in the vast majority of situations, an employer offers severance pay only in exchange for the employee signing a severance agreement.

A severance agreement is a contract between employee and employer.

While severance agreements may be included as part of an employment contract, it is also common for the employer to provide severance pay in exchange for the employee’s agreement not to sue the employer.

This is an important point because there are a number of reasons why an employee would sue their employer.

Giving up these rights in exchange for severance pay isn’t necessarily a “bad deal” but it is certainly worth considering what you’re giving up.

For example, when you sign a severance agreement, you may promise not to file an employment lawsuit against your employer for almost any civil reason, including:

  • Sexual harassment,
  • Wrongful termination, and
  • Employment discrimination that is based on gender, race, sex, age, religion, sexual orientation, pregnancy status, or any other protected trait.

Additionally, your employer may ask you to refrain from doing other things.

For example, it is common for employers offering severance pay to ask employees not to discuss the reason they were terminated or to disclose the company’s trade secrets.

What Rights Do You Retain After Signing a Severance Agreement?

While California law allows employees to give up many rights when signing a severance agreement, employees still retain some rights.

For example, you cannot waive the following by signing a severance agreement:

  • The right to pursue a wage and hour claim;
  • The right to collect unpaid wages; or
  • The right to report a crime related to your former employment.

Along those lines, an employer cannot demand an employee commit a crime themselves—for example, by perjuring themselves for the benefit of their former employer.

Are You Interested in Learning More About Severance Pay in California?

If you were recently terminated and want to learn more about the applicability of a severance agreement, a California employment lawyer at Starpoint Law can help.

At Starpoint Law, we provide our clients with the highest and most professional experience while dealing with complex legal situations.

Regardless of the employment issue you are dealing with, our lawyers can advise you on your options and help you determine the best way to proceed.

To learn more and to schedule a free consultation, call 310-424-9971 today. You can also reach us through our online contact form.

Author Photo

Aidin Ghavimi

Aidin is a partner at Starpoint LC, Attorneys at Law, and focuses on personal injury cases in and around Southern California. He earned his Juris Doctorate from Loyola School of Law and his Bachelor’s from USC. Aidin’s primary goal is to bring justice to his clients and to ensure they are able to move on with their lives after a serious injury.

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