A severance agreement goes beyond a standard employment contract. Severance is a form of compensation provided by an employer to an employee upon termination of their employment, typically in cases of layoffs, job elimination, or mutual agreement to part ways. It is usually based on the employee’s length of service and salary level, and is intended to provide financial support during the transition period while the individual seeks new employment.
The terms of severance pay are often outlined in employment contracts or company policies, though in some cases, they may be negotiated at the time of termination. A well-structured agreement primarily provides financial support that bridges the gap during your job search. Moreover, a severance agreement defines:
- Monetary compensation (often tied to your length of employment or role)
- Information on the continuation of salary for a specified period
- Details on extended benefits (such as health insurance) during your transition
- How job references will be handled
- Confidentiality requirements
- Requirement to waive specific legal claims
Additionally, according to Section 201 of the California Labor Code, discharged employees should be paid all wages due at the time of termination. “All wages” include any earned but unused vacation pay.
Common Terms to Look for in a Severance Agreement
Some employers include restrictive terms, hoping employees will simply sign. That’s why clear, compassionate guidance is crucial when seeking compensation. At Waltman Employment Law, we help you unpack the fine print, including:
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Confidentiality clauses: These can restrict you from discussing your agreement or the circumstances of departure. Confidentiality clauses can go beyond what’s needed to protect business interests.
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Non-disparagement provisions: Provisions prevent negative commentary about your former employer.
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Release of claims: Ask you to give up your right to pursue legal action for past employer violations.
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Restrictive covenants: Non-compete and non-solicitation agreements that limit where and with whom you can work.
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Future references: These affect how your departure is characterized to future employers.
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Unjust compensation: This refers to compensation that fails to reflect the rights you’re waiving.
You may be entitled to more than what’s initially offered. At Waltman Employment Law, we combine our employment law experience with a strategic negotiation plan personalized to your needs. Even if you’re told it’s a final offer, you may have negotiating power. We’re ready to level the playing field by helping you understand your value, rewrite unfair terms, and advocate for an agreement that recognizes your full contributions.