The moment it happens is disorienting. You’re called into a meeting, told your position is being eliminated or your employment is ending, and then handed a document and asked to sign. Sometimes there’s a pen on the table. Sometimes you’re told the offer expires soon. What most employees don’t realize in that moment is that a severance agreement isn’t a formality or a parting gift. It’s a contract, and like any contract, it has terms worth understanding before you agree to them.
We work with employees across Los Angeles and the San Fernando Valley who come to us after signing agreements they didn’t fully understand, and others who come to us before signing, which is when we can actually help. If you’ve been handed one of these documents, knowing what’s inside it and what the law says about your rights can change the outcome significantly. Our consultations are free and we work on a contingency fee basis, so getting a second opinion costs you nothing.
What You Are Actually Agreeing To
At its core, a severance agreement is an exchange: the employer offers pay or benefits beyond what they already owe you, and in return, you release your legal claims against them. That release is the central element of the deal. Without it, the employer has no reason to pay you more than your final paycheck.
What makes the release broader than most employees expect is California Civil Code section 1542. Under that provision, a general release of claims ordinarily doesn’t cover claims the employee doesn’t yet know about. But most severance agreements include an express waiver of section 1542 protection, meaning you’re releasing not just the claims you know you have today but also claims you might not discover until later. That’s a significant reach, and it’s why the value of what you’re giving up matters as much as the value of what you’re receiving.
Beyond the release itself, severance agreements typically include several other provisions worth reading carefully:
- Non-disparagement clauses restrict what you can say about the employer, sometimes in ways that limit your ability to describe your own work experience truthfully.
- Confidentiality terms often require you to keep the settlement amount and the agreement’s existence private.
- Non-solicitation clauses may prohibit you from recruiting former colleagues or pursuing certain clients for a defined period.
- Cooperation clauses can require you to assist the company in future litigation or investigations, sometimes with no defined end date or compensation.
How Long You Have to Decide
California law sets a floor on how long an employer must give you to review a severance agreement, and the answer depends on your age and the circumstances of your separation.
Under the Silenced No More Act, codified at Government Code section 12964.5, any employer offering a severance or separation agreement must give you at least five business days to consider it and must notify you of your right to consult an attorney before signing. Signing before those five days are up doesn’t automatically invalidate the agreement, but an employer who pressures you to sign immediately may be violating this requirement.
Age 40 & Older: The Federal OWBPA Rule
If you’re 40 or older, the Older Workers Benefit Protection Act requires that any release of age discrimination claims give you at least 21 days to review the agreement before signing. In a group layoff, that window extends to 45 days. After you sign, you also have 7 days to revoke your signature, and the agreement can’t take effect until that revocation period expires. When both the California five-day rule and the federal 21-day rule apply, the longer period controls. So if you’re under 40, you’re entitled to the California five-business-day period but not the OWBPA timeline.
Rights California Law Won’t Let You Sign Away
A severance agreement can release a wide range of claims, but not every right is waivable. No severance agreement can lawfully strip you of wages already earned. Claims for unpaid minimum wage, overtime, or missed meal and rest break premiums under California Labor Code provisions can’t be waived in a private settlement without court or Labor Commissioner approval. Similarly, a severance agreement can’t bar you from filing for unemployment insurance or pursuing a workers’ compensation claim for an injury that occurred during your employment.
One protection employees often don’t realize they retain is the right to file a complaint with a government agency. A severance agreement can’t lawfully prohibit you from contacting or filing a charge with the California Civil Rights Department, which handles discrimination, harassment, and retaliation complaints under the Fair Employment and Housing Act. The CRD’s Los Angeles office is located at 320 West 4th Street, Suite 1000, Los Angeles, CA 90013. The federal Equal Employment Opportunity Commission handles federal claims on a parallel track. These avenues remain open even after you sign.
Non-compete provisions appear in severance agreements more often than they should, given that they’re generally void in California. Business and Professions Code section 16600 bars most post-employment restrictions on where you can work or which clients you can serve, with only narrow statutory exceptions. If your severance agreement includes a non-compete clause, have an attorney review whether it can actually be enforced against you before you treat it as binding.
Deciding Whether to Sign, Negotiate, or Walk Away
Once you understand what you’re being asked to release, the core decision becomes clearer: does the severance offered fairly reflect the value of the claims you’re giving up? Wrongful termination, workplace discrimination, harassment, retaliation, unpaid wages, and other employment law violations all represent potential claims the release would extinguish. If any of those were factors in your separation, their value belongs in the equation.
What employees frequently don’t realize is that they can push back on the terms. Payment amount is negotiable. Reference language can be addressed. Non-disparagement clauses can sometimes be made mutual, meaning the employer agrees not to disparage you either. Cooperation clauses can be narrowed in scope. The first document you receive is an opening offer, not a final decree.
Declining to sign is a legitimate choice. Doing so preserves all of your legal rights, including any claims you might bring in court or before an administrative agency. The trade-off is that you forfeit the severance offered. Whether that trade-off is worth it depends entirely on what claims you have and what the severance is actually worth. That is an assessment that’s nearly impossible to make accurately without legal guidance, and exactly what the review period is designed to give you time to get.
What to Do Before Your Review Period Expires
The review period built into California law and the OWBPA isn’t a bureaucratic formality. It exists because releasing legal claims is permanent, and employees deserve time to understand what they’re signing away. An agreement signed under pressure, without understanding the scope of the release or the value of what’s being surrendered, may still be enforceable, which is exactly why using that time matters.
At Laurel Employment Law, APC, we review severance agreements for employees across Los Angeles and the San Fernando Valley, including Spanish-speaking workers who want to go through the terms in detail in their preferred language. If you’re holding an agreement and trying to decide what to do, call us at (310) 929-6371 before that review period closes.