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When Not to Sign a Severance Agreement in California

Written By: Mo Eldessouky Updated On: May 16, 2023 | Read Time: 7 Minutes

Whenever your employer offers you a severance agreement, it’s important to read and understand the document carefully and when not to sign a severance agreement.

Not in every situation will it be in your best interest to accept the agreement as is.

If you think the offer is not satisfactory or you are confident in negotiating a better one, it might be helpful to seek advice from an employment attorney. Remember that you are not obligated to sign a severance agreement as an employee.

Severance agreements in California are binding. As such, you should do your due diligence before signing anything.

When Should You Not Sign a Severance Agreement?

when not to sign a severance agreement

You should not sign a severance agreement if you haven’t consulted an employment attorney, are considering a lawsuit against your employer, find the severance package insufficient, are being pressured to sign without review, fear professional consequences, or don’t understand the agreement’s language.

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Here are the main reasons an employee may not want to sign a severance agreement:

  1. you have not yet consulted with an employment attorney
  2. you are considering pursuing a lawsuit against your employer
  3. your severance package is not sufficient
  4. you are being pressured to sign the agreement without being able to review it
  5. signing this agreement may hurt or restrict your professional career, and
  6. you don’t understand the language in the agreement.

1. You Have Not Yet Consulted with an Employment Attorney

You should also not sign a severance agreement if you do not have a lawyer. Severance agreements are binding under California law, and they may include complex legal language. Consulting with an employment attorney familiar with labor laws in your state can ensure that you understand the document completely.

An attorney can also help you:

Having an attorney on your side can ensure that you are being treated fairly and receiving the best possible severance package.

If you need help understanding your severance agreement and deciding whether or not to sign it, the experienced trial attorneys at Eldessouky Law can help. Contact us today to learn more about your rights and options.

2. You Are Considering Pursuing a Lawsuit Against Your Employer

If you are considering pursuing a future lawsuit against your employer after your termination, then signing a severance agreement will likely prevent you from doing so.

A severance package offer may indicate that your employer believes you may have legal claims against them, and they’re willing to pay to prevent you from taking legal action. If you accept the offer, you’ll be waiving your right to sue your employer for any legal claims you may have. Seek legal advice before signing if considering legal action.

The severance agreement will include a crucial provision known as the “waiver of claims” or “release of claims.” This provision will outline the types of legal claims that you must relinquish in exchange for receiving the severance package.

The types of legal claims listed in this provision often reflect the concerns of your employer and may include claims related to:

  • defamation,
  • wrongful termination,
  • discrimination,
  • disability,
  • COBRA healthcare coverage,
  • FMLA family leave rights,
  • ERISA retirement benefits,
  • and any other unknown claims at the time of signing the severance agreement.

In addition, you will not be able to join in any class action lawsuit against your former employer.

Signing a severance agreement and accepting the offered package relinquishes your right to bring legal claims against your employer if the claims are listed in the release of claims provision.

However, there are certain legal rights that cannot be waived in a separation agreement, including rights to workers’ compensation benefits, unemployment benefits, unpaid wages, and the ability to file a discrimination charge under Title VII with the EEOC.

Furthermore, some separation agreements only partially strip away your claims. For example, in California, the right to file a class action lawsuit against your employer can be waived in a severance agreement, but the right to sue under the Private Attorney General Act (PAGA) cannot be waived.

Despite this complexity, employers may still list unwaivable rights in a severance agreement, but that provision would not be enforceable. To understand your rights, consult with an employment lawyer.

IMPORTANT: If you want to sue your employer for employment violations, do not sign the severance agreement until you have spoken with an employment attorney. An experienced lawyer can help protect your rights and negotiate a better settlement on your behalf.

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3. Your Severance Package is Not Sufficient

It’s likely that the initial severance package offered by your employer may not meet your needs. If you believe the offer is inadequate, you have the option to negotiate for a better package.

Knowing what a reasonable severance package looks like for your circumstances can assist you in determining what to request during negotiations. You will need to speak with an employment attorney who can clarify what is fair and reasonable for your situation.

Despite what your employer may be telling you, negotiation is possible. You could increase the value of your severance package by requesting more money, additional benefits, or extensions of existing benefits.

If you’re considering signing a severance agreement that requires you to waive your right to sue your employer, it’s important to weigh the benefits and potential drawbacks carefully.

While accepting the offer means you’ll receive a guaranteed severance pay, often in a lump sum and avoid the costs, effort, and time of litigation, the initial offer is likely to be lower than what you deserve. Negotiating a fair severance package may take several rounds of discussions, but it’s important not to sign the agreement until the package is adequate and worth giving up your legal rights.

4. You Are Being Pressured to Sign

If your employer has given you a deadline to accept the severance package, you may be hesitant to consult with a lawyer for fear of missing the deadline. However, these deadlines are typically irrelevant and are only intended to pressure you into accepting a lower offer than you deserve.

If your employer is pressuring you to sign a severance agreement, make sure to take the time required to consult with an employment attorney before signing anything.

Employers are usually willing to extend the deadline upon request. Do not let the employer’s artificial deadline prevent you from making an informed decision.

Acting quickly is important for certain legal claims; however, when it comes to severance agreements, it is best to take the time to speak to an attorney and negotiate a better package than what was initially offered.

In addition, if you are being pressured to sign a severance agreement, there may be a reason why your employer wants you to sign it quickly.

Employers may use severance agreements to prevent legal disputes and tie up loose ends, especially if they are in violation of employee rights.

5. Signing a Severance Agreement May Hurt or Restrict Your Professional Career

Severance packages usually come with strict restrictions, including a non-compete clause that bars you from working for a competitor or starting a similar business. These limitations can prevent you from working in your industry for a certain period, which can hurt your career.

So, it’s crucial to consider the financial compensation alongside the potential career setbacks and thoughtfully assess if the terms and conditions are acceptable.

A non-compete clause can prevent you from:

  • Working with a competitor
  • Starting a similar business
  • Using confidential information obtained during the employment period
  • Contacting other employees of the old employer for work or consulting opportunities

While some non-compete clauses are necessary and valid, there are some that are overly broad and restrictive.

Over-aggressive non-compete clauses can lead to limited career options and make it difficult to find a job, so be sure to read the terms of your severance agreement carefully.

If there is a non-compete clause included in the agreement, speak with an employment attorney to ensure that the clause is fair and reasonable.

6. You Don’t Understand the Language in the Agreement

Avoid signing any agreement that you do not comprehend. Severance agreements frequently include intricate clauses, such as non-compete and confidentiality clauses, among others.

If the wording of the agreement is unclear or hard to grasp, take the time to have it explained by an employment lawyer before signing anything. Even if the employer demands a prompt response, never sign a severance agreement without comprehending it.

It is in your best interest to ensure that you comprehend the document and all of its implications before signing it. An employment lawyer can help you evaluate the terms of the agreement, clarify any potential risks or benefits, and provide guidance on how to negotiate for a better package.

Receiving severance pay after signing a separation agreement may not be the end of the road for terminated employees. If the terms of the agreement are not fully understood, they may unknowingly violate them and later be sued by their former employer. This can result in significant setbacks for their career.

Severance Agreements are Binding Contracts Under California Law

Signing a severance agreement means you’re forfeiting all your legal rights against your employer. In California, this agreement is binding, and there’s no going back once it’s signed.

If you waive your legal rights, you’re agreeing to not take any action against the employer. This means you can’t sue them, regardless of how much evidence you may have to prove that they wronged you.

As such, take caution when signing a severance agreement, as there is no undoing the decision once made. Make sure that you are fully understanding of the language and options provided before signing anything. This is why employment lawyer advice is critical in this situation.

Why You Should Hire a Lawyer to Protect Your Interests In Severance Agreements in California

It’s important to hire a lawyer experienced in negotiating severance agreements to protect your interests and improve the settlement you receive.

Dealing with layoffs and potential wrongful termination alone can be challenging for employees, which is why having a skilled attorney on your side can increase your chances of getting a better deal.

The employment attorneys at Eldessouky Law in California can help you navigate your severance agreement and understand your rights. Don’t make the mistake of signing your agreement without a proper review by an experienced employment lawyer.

We represent employees throughout California.

Do not wait to contact us to start discussing your situation. Our California employment attorney will provide personal attention and confidential advice you can trust.

Call us at 714-409-8991 to schedule a free case evaluation.

We are available for video conference calls

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