Although California employers are not legally obligated to offer an employee severance pay (with the exception of by contractual agreement), many voluntarily elect to do so because it provides the desired closure provided by a release of legal claims. More specifically, in almost every circumstance, an employee must sign a release of any and all potential legal claims the employee may have in exchange for severance payments.
While severance pay often gives an employee a short-term benefit during a difficult time of transition, it can also create substantial long-term consequences. For example, if an employee was misclassified as an exempt employee and later discovers they may be entitled to overtime payments, the release language contained in a severance package most likely waives that claim. The same goes for potential claims for harassment, discrimination, retaliation, and wrongful termination. In fact, in California the law provides for an agreement for a general waiver which waives every claim, either known or even unknown, with only very limited exceptions (i.e., workers’ compensation claims). Thus, if an employee is offered a severance agreement, it is often critical to speak with an employment attorney in Orange County to understand its language and consequence as well as whether it represents a reasonable compromise of claims.
In addition, depending on the surrounding circumstances, severance agreements can sometimes be negotiated to increase severance payments or other benefits. A negotiation of terms may also be important to ensure the information communicated by the employer to an employee’s future employers is within the realm of reasonable expectation.
For all of these reasons, it is important for an employee to speak to an employment lawyer regarding any severance package they may be offered. Even though it may result in only a brief delay in acceptance, the long-term comfort of understanding the terms of the agreement as well as the merits of any potential legal claims which may be subject to waiver is critical. The last thing an employee wants to do is quickly execute a severance agreement only to find out months later that the binding agreement precludes them from pursuing meaningful legal claims and remedies.
The employment attorneys at Ares Law Group have significant experience and expertise in drafting, analyzing, and negotiating severance agreements. Should you have any questions regarding your severance package, or whether you possess a legal claim as a consequence of your employment, please feel free to contact an attorney at Ares Law Group to receive assistance.