Short answer: a severance agreement is a contract in which the employer pays you money or benefits in exchange for a release of every claim you could bring against it. California does not require severance, so the offer is a negotiation, and the amount should reflect the claims you are giving up: wrongful termination, discrimination, harassment, retaliation, unpaid wages and more. California also limits what an employer can put in the agreement, and voids non-compete clauses entirely. Do not sign under a deadline without having the agreement reviewed. Abdi & Associates, Inc. helps individuals with severance agreement review and negotiation throughout California. The consultation is free.
What a severance agreement usually contains
- Severance pay, typically a number of weeks of salary based on length of service, and sometimes a pro-rated bonus, accrued vacation (which is owed regardless, Labor Code section 227.3), or continued health coverage through COBRA or Cal-COBRA;
- a general release of all known and unknown claims against the employer, including a waiver of Civil Code section 1542, which is the provision that makes unknown claims releasable;
- confidentiality and non-disparagement clauses;
- return of company property and a reminder of continuing trade secret obligations;
- a non-solicitation or non-compete clause, which in California is generally void (see below);
- an agreed reason for separation, a neutral reference, and sometimes an agreement not to contest unemployment benefits;
- a revocation period for employees 40 and older, who must be given 21 days to consider a release of federal age discrimination claims (45 days in a group layoff) and seven days to revoke after signing (Older Workers Benefit Protection Act).
What California law does not allow in a severance agreement
- Non-compete clauses are void. Business and Professions Code section 16600 voids any contract that restrains an employee from engaging in a lawful profession, and sections 16600.1 and 16600.5, effective 2024, make it unlawful to include a non-compete in an employment contract or to try to enforce one, regardless of where it was signed. An employer that includes one anyway may be liable for attorney fees.
- Silence about unlawful conduct cannot be bought. A severance agreement may not prevent you from disclosing information about unlawful acts in the workplace, such as harassment, discrimination or retaliation, and any non-disparagement clause must say so (Government Code section 12964.5). Confidentiality clauses covering the facts of a sexual harassment or discrimination claim are unenforceable (Code of Civil Procedure section 1001).
- Time to consult a lawyer. An employer must notify you of your right to consult an attorney and give you at least five business days to do so before you sign a release of employment claims (Government Code section 12964.5(b)).
- Wages cannot be waived. A release cannot waive wages you have already earned, including final pay, overtime and accrued vacation (Labor Code section 206.5), or your right to file a charge with the EEOC, the Civil Rights Department or the Labor Commissioner, or to receive unemployment or workers’ compensation benefits.
What your claims are worth before you release them
The employer is buying a release. The value of the release depends on whether you have claims and how strong they are: were you fired after complaining about harassment, requesting leave, reporting a safety violation or filing a workers’ compensation claim? Were you paid all overtime and given all breaks? Is there a pattern of older or disabled employees being pushed out? A severance offer of two weeks’ pay in exchange for releasing a viable wrongful termination or discrimination claim is a bad trade, and if you were let go in a group layoff the release may also be giving up a California WARN Act claim worth up to 60 days of pay and benefits; the same offer to an employee with no claims may be fair. A lawyer’s review is mainly a claim evaluation, and it often leads to a materially better number or to the decision to decline the agreement and pursue the claims.
Negotiating the agreement
Employers expect negotiation. Items that are routinely improved include the amount, payment timing (a lump sum rather than installments), the characterization of the separation, a neutral reference, extended health coverage, mutual non-disparagement, removal of unlawful clauses, a carve-out for indemnification and vested benefits, and the tax treatment of the payment. Employees covered by an ERISA severance plan may have to exhaust the plan’s internal claims and appeal procedure before suing for benefits, so plan documents should be requested and reviewed.
Deadlines
The agreement will set a deadline to sign, but the legal deadlines that matter are the ones on the claims you would be releasing: three years to file a Civil Rights Department complaint for discrimination, harassment or retaliation (Government Code section 12960); two years for wrongful termination in violation of public policy; three to four years for wage claims. Do not let a short signing deadline stampede you; you can ask for more time, and the law guarantees at least five business days.
How Abdi & Associates can help
Abdi & Associates, Inc. helps individuals with severance agreements throughout California. We review the agreement, evaluate the claims you would be releasing, identify unlawful provisions, and advise on negotiation or, where the claims are strong, on declining the agreement and pursuing them, working with experienced employment counsel we trust when a case calls for it. We work remotely, by phone, video and secure electronic signature. The consultation is free. Call (888) 772-2529 before you sign anything.
Frequently asked questions
Am I entitled to severance pay in California?
No law requires it. Severance is owed only if an employment contract, a plan or a policy promises it, or in exchange for a release.
Can I still collect unemployment if I sign?
Generally yes. Severance pay does not by itself disqualify you from unemployment insurance in California, and an agreement cannot waive your right to apply.
What if I already signed?
A signed release is usually binding, but releases obtained by fraud or duress, releases that violate the statutes above, and releases of claims that cannot be waived can be challenged. Employees 40 and older have seven days to revoke a release of age claims.
What does a review cost?
The consultation is free. If the review leads to negotiation or a claim, the fee arrangement is explained in writing before any work begins.
For related claims, see our pages on wrongful termination and the employment law overview.
Sources: Cal. Bus. & Prof. Code §§ 16600, 16600.1, 16600.5; Cal. Gov. Code §§ 12960, 12964.5; Cal. Code Civ. Proc. § 1001; Cal. Civ. Code § 1542; Cal. Lab. Code §§ 206.5, 227.3; 29 U.S.C. § 626(f) (Older Workers Benefit Protection Act).
Reviewed by Shawn Abdi, Esq., Abdi & Associates, Inc. Last reviewed: September 4, 2026. Attorney advertising. This page is general information, not legal advice about your specific situation. Legal deadlines have exceptions; confirm the deadlines that apply to your case with a lawyer.