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Negotiating a Severance Release in California

Posted by attorney Vadim Alden

Leaving a job is never easy, especially if it occurs on the employer’s terms (e.g., termination, lay-off, or forced resignation). Unless termination occurs “for cause" many employers would insist the departing employee sign a “release" in exchange for some type of severance. When faced with a possibility of termination, consider the following in negotiating your severance agreement:

Determine the Reason for Termination

Are you being let go for cause? Are you leaving because of a possible “wrongful" or discriminatory behavior, act or omission by your employer? It is illegal for employers to fire an employee because of the employee's race, gender, national origin, disability, religion, sexual orientation, pregnancy, age (if the employee is at least 40 years old), or in retaliation. Depending on the reason, you may have a claim in court or another administrative body for wrongful termination, which you should explore before signing a release. The reason will also impact many other aspects of your severance and your negotiating position. That is why it is crucial to determine why you are being let go.

Examine the Terms Of the Release

What will your severance be? Is it a lump sum payment or some other benefit? The contract should unambiguously describe the amount and the terms under which you are receiving the amount of severance as consideration for your release. In certain cases, the employer may offer you other benefits instead of a lump sum, such as stocks or other amenities.

The release will almost always contain a confidentiality provision. In some cases, there will also be a non-disparagement clause. Consider making sure that the non-disparagement goes both ways – in other words, the employer should be bound by it as well.

The release may include other provisions for confidentiality, non-disclosure, the return of company property, choice of law, and integration clauses. Ensure that you comply with each of those provisions because failure to do so may nullify your agreement with the company or impact the enforcement of the agreement. In some cases, you may have to refer to your initial offer letter which may have provisions related to confidentiality or proprietary rights to intellectual property, which you may have agreed to before beginning your employment. It may be wise to consult a lawyer on any issues that are unclear to you before you sign the agreement.

Consider Your Other Benefits

In addition to your severance, you should know in advance what happens to your pension or 401k account, your stocks, if any, and options which may not have vested. Don’t forget to think about health insurance, and note any dates when your coverage would expire. You should also determine if you have any vacation pay owed to you.

Think About Your Future

In case you don’t have a job lined up, if you did not quit for a wrongful reason or were not terminated for cause, you are likely to be eligible for unemployment. Apply early as it takes about a month to begin receiving benefits, assuming you qualify. Consider if you can obtain a positive reference from your employer. This could help you secure another job. Finally, remember that any job is just a job, and no matter what happens, there are always options available to you in your next place of employment.

Additional resources provided by the author

For unemployment and other resources, check out California Employment Development Department: http://www.edd.ca.gov/

For workplace rules, wage/hour laws, etc., contact the California Labor Commisioner: http://www.dir.ca.gov/dlse/dlse.html

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