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Honoring Employment Agreements with Severance Obligations in a financial hardship scenario

San Diego, CA |

I work at a company and there are several manager (and I'm one of them) with employment agreements containing severance obligations upon termination (without cause). Now, the company is not doing well financially, and is being sold. They have not announced who the new buyer is yet. But, executive mgmt has stated that the company would not honor those employment agreements. I didn't think this could be the case in California. I'm looking for more insight and direction on this matter.

Attorney Answers 2


If you are an at will employee, your employer can change the terms and conditions of your employment at any time for any reason, or for no reason, upon notice to the employee. Your choice is to quit, or to continue to work under the new terms.

If you are not an at will employee, it is altogether different. For instance, if your written employment agreement guarantees you employment for a period of time, or says you can be terminated only for good cause, then you are not an at will employee. If that is the case, and if you are let go, you should locate and consult with an employment law attorney to determine your options.

Good luck to you.

This answer should not be construed to create any attorney-client relationship. Such a relationship can be formed only through the mutual execution of an attorney-client agreement. The answer given is based on the extremely limited facts provided and the proper course of action might change significantly with the introduction of other facts. All who read this answer should not rely on the answer to govern their conduct. Please seek the advice of competent counsel after disclosing all facts to that attorney. This answer is intended for California residents only. The answering party is only licensed to practice in the State of California.

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5 lawyers agree


I agree with Attorney Pedersen:

You and your colleagues should ask a knowledgeable lawyer to analyze the employment agreements and explain your rights under those agreements.

This information does not constitute legal advice and does not establish an attorney-client relationship.

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