When coming to the end of your employment, employers in California are not required but may offer you a severance agreement. The legal document known as a severance agreement or severance package outlines the terms and conditions of your departure and any associated benefits that may be presented. In order to make informed choices and safeguard your rights, it’s crucial to comprehend the complexities of these agreements. The text outlined below can serve as a guide through essential steps and factors to consider when assessing a severance agreement in California.
Understanding Severance Agreements
In California, a severance agreement is a legally binding document, serving as a contract between an employer and employee, offering additional compensation or benefits that go beyond the scope of what the employee may typically be entitled to under the law. For example, it may include provisions related to severance pay, continuation of health benefits, non-disclosure agreements, non-disparagement clauses, and more. It’s essential to review the document carefully and consult with an employment attorney to ensure you fully understand its implications before signing.
What is SB 331, and how does it relate to severance agreements?
No mandate currently requires employers to provide severance under California law. However, Senate Bill 331 (SB 331), signed into law by California’s Governor Newsom in October of 2021, put into effect several key provisions and restrictions regarding severance, including time to review an agreement. Therefore do not feel pressured or rush to sign a severance agreement. You have a minimum of five days to review the document. Further, SB 331 specifies the right of workers or former employees to consult with an attorney, and the employer must make the employee or former employee aware of this right. In addition, any employer is not permitted and does not have the authority to include anything in a severance agreement that prevents an employee from discussing or disclosing fact-based information regarding cases or claims of retaliation, harassment, bias, and retaliation. These protections are outlined under the Fair Employment and Housing Act and apply to private and public employers and organizations and claims related to race, gender, sex, creed, and other protected characteristics. Any confidentiality clauses or provisions tied to protected characteristics under state and federal law are prohibited as outlined under the expansive SB 331.
Reviewing the Terms and Conditions
It’s important to carefully review the terms and conditions of a severance agreement before signing it to ensure you understand all the provisions. Some key factors to consider include:
- Severance Pay: Having a clear understanding of the amount and timing of any severance pay being offered is crucial. Be sure to assess if it conforms to the norms of the industry and your tenure at the company.
- Benefits Continuation: It’s necessary to check if the agreement covers health insurance, retirement plans, and other benefits and how long they will continue. Additionally, evaluating how agreeing will impact your overall financial well-being is essential.
- Confidentiality and Non-Disclosure: Evaluating confidentiality and non-disclosure clauses is crucial to avoid hindrances in discussing the terms of your agreement or employment experience. As mentioned above, such clauses are restricted from use when related to harassment, matters of retaliation, and discrimination or bias. However, the clauses are still permitted in severance agreements for other purposes. You must consider the long-term effect of the agreement on your job prospects or your ability to address workplace points openly.
Consideration Period and Waiver of Legal Rights
Employees 40 years old and above in California are entitled to certain rights and protections as stipulated under the federal protection of the Older Workers Benefit Protection Act (OWBPA). Qualifying workers are shielded under the OWBPA, which grants them the right to receive vital information before signing any waiver or release of legal claims. Additionally, they have the right to receive retirement and health benefits without discrimination. The OWBPA requires employers to provide a reasonable period for employees to review and consider the severance agreement. OWBPA-eligible employees have at least 21 days to determine whether to accept a deal in addition to a seven-day window to revoke their acceptance even after signing. If you are 40 or older, it is imperative to learn your rights, understand the timeframes, and consult with a seasoned employment attorney to ensure compliance and protection of your rights.
Negotiating the Agreement
When presented with a severance agreement, knowing that they are typically negotiable is important. If you have any concerns or desire to modify certain aspects of the agreement, it may be beneficial to have a discussion with your employer or legal representative. Alternatively, if speaking first and directly with the employer or their legal rep seems overwhelming, you can highlight the items or points you wish to modify or negotiate for to the attention of your own legal representative. A skilled employment lawyer can offer valuable guidance and assistance throughout the negotiation process to help you obtain more favorable terms.
Consulting an Employment Attorney
When faced with a severance agreement, it’s crucial to approach the situation cautiously. Take the time to familiarize yourself with the terms and conditions, know your rights, and seek counsel from an employment attorney to protect your best interests. With the right knowledge and professional guidance, you can confidently make informed decisions that align with your needs and goals during this difficult period of employment transition.
Given the level of complexity involved with most severance agreements, consulting an employment attorney is common practice and vital to ensuring your best interests and rights are protected. An attorney can help you understand the legal implications of the agreement, assess whether it is fair and reasonable, and identify potential negotiation opportunities. They can also review the agreement for any unlawful provisions or potential violations of your rights. Contact an experienced Inland Empire and San Bernardino County employment attorney to schedule a confidential and complimentary consultation.
