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Common California Terms in a Severance Agreement

Common California Terms in a Severance Agreement

Key Clauses and Provisions Typical to California Severance Agreements

Severance agreements in California often contain language and provisions that reflect both federal and state-specific legal requirements. Below is a list of common terms and clauses you may find in a California severance agreement:

  1. Release of Claims: This is a broad waiver in which the departing employee agrees not to sue the employer for any claims arising out of their employment or termination. In California, this often includes a specific waiver of California Civil Code Section 1542, which deals with unknown claims.
  2. California Civil Code Section 1542 Waiver: This specific language is common and requires the employee to expressly waive rights under Section 1542, which otherwise preserves claims unknown at the time of signing.
  3. Consideration Period and Revocation:
  4. For employees over 40, federal law (OWBPA) requires a 21-day consideration period and a 7-day revocation period. California employers often include these timelines for all employees as best practice.
  5. Non-Admission of Liability: The agreement typically states that the employer does not admit any wrongdoing or liability.
  6. Confidentiality: Provisions requiring the employee to keep the terms of the severance agreement and, sometimes, information about the employer confidential. California law limits certain confidentiality provisions, especially regarding unlawful acts in the workplace.
  7. Non-Disparagement: Clauses preventing both parties from making negative statements about each other. California law (as of SB 331, "Silenced No More Act") restricts non-disparagement clauses related to unlawful acts in the workplace.
  8. Payment Terms: Details of severance pay, final paycheck, accrued vacation, and any other compensation. California law requires prompt payment of final wages and accrued vacation upon separation.
  9. COBRA/Health Benefits: Information about continuation of health coverage under federal COBRA and California’s Cal-COBRA laws.
  10. Return of Company Property: Obligation to return all company property, documents, and data.
  11. Non-Compete and Non-Solicitation: California generally prohibits non-compete clauses, and any such language may be unenforceable. Non-solicitation provisions are also subject to strict scrutiny under California law.
  12. Protected Rights Notice: Notice that the agreement does not prevent the employee from participating in government investigations or whistleblowing activities.
  13. Governing Law and Venue: The agreement usually specifies that California law governs the agreement and identifies the proper venue for any disputes.
  14. Voluntary and Knowing Agreement: Language confirming that the employee has had a chance to review the agreement, consult an attorney, and is signing voluntarily.

These terms are commonly found in California severance agreements, though the exact language and inclusion may vary depending on the circumstances of employment, the employer’s policies, and recent changes in California employment law. Employees are encouraged to have an experienced California employment lawyer like our office review severance agreements carefully before signing.