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Severance Agreements in California: What Employees Should Know

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Leaving a job can be challenging. Severance pay helps to ease some of the financial burden of a transition. Many employees have questions about severance pay. At Wagner Zemming Christensen LLP, we want to make sure that you have the knowledge and tools you need to protect your interests. Here, our Riverside employment lawyers provide an overview of important things you need to know about severance pay and severance negotiations in California.

What is Severance Pay?

Severance pay is a broad term used to describe the compensation or benefits that an employee receives when they leave a position. An employee may receive a severance package after resigning, being laid off, or being terminated. To be clear, severance pay is rarely given without strings attached. Typically, an employee is required to give up certain rights—most notably, the right to sue their employer—in exchange for severance.

You may be wondering: How is severance pay calculated in California? There is no single definitive answer to this question. Most employers will offer a severance package that they consider to be ‘fair’ under the circumstances. As explained by the Department of Labor (DOL), severance pay is a matter of agreement between an employer and an employee. Most often, severance pay is based, in part, on the length of a worker’s employment. Though, that is not required.

Severance Pay is Not Required Under California Law or Federal Law

Severance pay is not guaranteed by the Fair Labor Standards Act (FLSA) or by California state law. In other words, employees in California do not have a right to receive severance as a matter of the law. Instead, a severance package is granted as part of a mutual agreement. Severance pay can be negotiated and both parties receive benefits.

Negotiating a Severance Package: Three Tips
Perhaps the most important thing employees need to know about severance agreements is that they are negotiated. A fair severance package will depend on a wide range of factors—including your level of pay, the duration of your employment, and your reasons for leaving the company. Here are three tips for negotiating severance pay in Southern California:

  1. Understand What You are Sacrificing: Employers are getting a tangible benefit in exchange for offering a severance package. Most often, these agreement require workers to give up their right to sue the company or organization for discrimination or wrongful termination. You may be asked to sign a waiver of liability or a release of claims. As explained by the Equal Employment Opportunity Commission (EEOC), these are enforceable contracts.
  2. Know Your Right to Ask for More: You are not obligated to accept any specific severance package. If you believe that agreement is unfair, you have the right to ask for more. Remember, you are giving up certain rights by signing a severance agreement. Make sure you are getting fair value.
  3. Consider All Available Benefits: In negotiating a severance agreement, it can help you be creative. It may not be best to focus solely on getting the highest lump sum payment possible. Other benefits, such as health insurance or retirement compensation, may provide an employer with additional flexibility to offer more.

As negotiating a severance package can be complicated, it is best to work with an experienced employee rights lawyer. Your California employment attorney will help you understand your rights, your responsibilities, and negotiate a severance package that truly protects your best interests.

Get Help From an Employment Attorney in Riverside, CA

At Wagner Zemming Christensen LLP, our California employment lawyers have the knowledge and experience to handle the full range of severance pay issues. If you have any questions about severance agreements or severance negotiations, we can help. Contact us now for a confidential, no obligation initial consultation. We represent employees throughout Riverside County, including in Temecula, Moreno Valley, Murrieta, Eastvale, and Corona.

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