California employees are often asked to sign an employment severance agreement when their employer terminates them from their job. Severance agreements may be called a General Release, Termination Agreement, Separation Agreement, Exit Agreement, or other similar terms.

The idea behind severance agreements is simple: employers will provide an immediate—but relatively small—severance payment in exchange for an employee to permanently give up their legal rights. An employer’s release and waiver of claims agreement usually requires an employee to surrender all their legal rights and give up all liability for employment law violations connected with the employment relationship.

So, what should employees look out for when deciding whether to sign this kind of termination agreement? What is the purpose of an employment severance agreement? These questions and more are answered in this post.

Why do Employers have work severance agreements?

A work severance agreement always favors the employer. Most employers use extremely broad language in their severance agreements to insulate themselves from all future lawsuits and legal liability. By having an employee sign away their legal rights and give up their right to sue or take other legal action, an employer can successfully avoid paying for any wrong they may have done.

What should I do if I receive an employment severance agreement?

If you receive a separation agreement, never let your employer pressure or force you to accept it. Like any other contract, all the terms, including how much money you will receive should be negotiable. You should carefully read the severance agreement and try to understand your obligations and the consequences. You should ask your employer or human resources personnel to give you a copy of the agreement and carefully review it. You should not allow your employer to pressure you to sign the agreement without giving you time to understand it. If your employer is pushing you for a quick signature, there is likely something harmful to you in the agreement and you should call an experienced employment attorney immediately.

Should I sign a severance or waiver agreement?

You should not sign your severance or waiver agreement unless you understand its consequences and think it is fair. It is important to consult an employment attorney to understand if your rights were violated before you accept the severance agreement. There are many reasons for not signing a severance agreement. The following reasons are a warning sign that you should not immediately agree to the severance agreement:

• If you feel your termination was unfair, you should probably not sign the severance agreement until you understand what rights you have and what rights you are giving up.
• If you are being laid off or quitting your job due to harassment, retaliation, or some other employment law violation, you should not sign any work severance agreement until you consult an employment lawyer about any legal claims you have.
• If the severance agreement contains a non-compete clause or non-disclosure clause, you should consider not signing the agreement. Agreeing to a non-compete and non-disclosure clause could significantly limit the work you perform for your next employer and thus make searching for another job much more difficult.
• If the severance agreement involves admissions of fault, you should consider not signing the agreement. This is especially the case if you are admitting or acknowledging workplace problems that you did not commit or weren't your fault. These admissions to fault could harm your future employment prospects and job benefits.
• You witnessed wrongdoing in the workplace or you believe your employee rights were violated.

You should not sign or agree to any work severance agreement until you understand what you are giving up and what you are receiving. If you think your employment law rights have been violated, contact an experienced employment attorney and determine what your options are.

My employer will not release my last paycheck or commission payment unless I sign the termination agreement, is this illegal?

Requiring an employee to sign a severance agreement in order to release owed or soon to be owed wages is a violation of California Labor Code § 2802.

An employer must pay you any owed money whether or not you agree to the severance agreement.

I was pressured to sign a waiver of claims and I did not understand the contract, what can I do now?

In general, a signed severance agreement or waiver of claims will be enforced on the agreed terms unless the agreement was obtained by fraud, duress, or undue influence. In order to challenge the enforceability of an agreement, an employee who signs a termination agreement has the burden of showing their agreement to the general release was not knowing and voluntary.

However, some agreements are not enforceable under law or have additional requirements before they can be enforced. The following examples illustrate particular situations where an agreement might not be enforced:

• Future wilful injury, fraud, or illegal acts cannot be waived by severance agreements in California. ((Civil Code, § 1668.))
• Termination settlement agreements may be unenforceable if they are shown to violate public policy. ((Town of Newton v. Rumery (1987) 480 U.S. 386, 392.))
• Federal and California discrimination claims cannot be waived or released in an employment termination agreement. ((Alexander v. Gardner–Denver Co. (1974) 415 U.S. 36, 51–52; Adams v. Philip Morris, Inc. (6th Cir. 1995) 67 F.3d 580, 585.))
• Employees who are at least 40 years of age may not waive any rights or claims under the Older Workers Benefits Protection Act unless they have at least 21 days to consider the agreement and have at least 7 days to revoke their agreement.
• Employer violations of the Family and Medical Leave Act ("FMLA") might possibly not be enforceable with a general release.

Final Thoughts.

Every employee should understand that a severance agreement and the amount your employer offers you is completely negotiable. If you have a legitimate grievance, you should feel entitled to negotiate or demand more for the legal rights you are surrendering. Understandably, deciding whether to enter or reject a severance agreement is often a difficult choice. Any employee who is faced with this difficult question must weigh the benefits of immediate payment now versus the potential loss of a much larger employment lawsuit recovery later on.

If you have questions about your employment termination or your severance agreement, please call us, Petronelli Law Group, PC, at 1-(949) 954-8181 to examine your legal options.