Severance Agreement: When Not to Sign & How to Protect Your Rights

March 28, 2025

Severance Agreement: When Not to Sign  

A severance agreement can provide financial support after job termination, but it often comes with legal conditions that may affect your future employment rights. While employers in California are not legally required to offer a severance package, they are often offered in exchange for an employee waiving potential legal claims. Before signing, it's crucial to understand when doing so may not be in your best interest. Consulting a California employment attorney can help you make an informed decision. 

When Not to Sign a Severance Agreement 

Before accepting a severance package, consider the following situations where signing may be a mistake: 
  • You plan to sue your employer – If you have claims for wrongful termination, discrimination, or unpaid wages, signing a severance agreement could waive your right to legal action. 
  • The severance package is insufficient – Employers may offer you a small monetary amount as part of your severance. A California employment attorney can help determine if the offer is fair. 
  • You do not have legal representation – A severance agreement may contain complex language that may significanty limit your rights. An employment lawyer can review the terms. 
  • You do not fully understand the agreement – If the contract is unclear, you could be signing away important protections unknowingly. 

Red Flags in a Severance Agreement 

Not all severance agreements are fair. Be cautious if you see: 
  • Non-Compete Clauses – California law (Cal. Bus. & Prof. Code § 16600, Senate Bill 699 and Assembly Bill 1076) prohibits non-compete agreements in almost all cases. If your severance agreement contains one, it may be unenforceable. 
  • Unclear or Ambiguous Language – If the terms are vague, they could be misinterpreted. Seek legal advice before signing. 
  • Unreasonable Confidentiality Provisions – Some agreements attempt to unfairly silence employees. 
  • Broad Release of Claims – A severance package that requires you to waive all claims may prevent you from pursuing legal action for workplace violations. 
  • Pressure to Sign Quickly – Employers may push you to sign immediately. However, the Older Workers Benefit Protection Act (OWBPA) grants employees 40 years of age or older at least 21 days to review an agreement. 
A severance agreement should never be signed without fully understanding its implications. If you’re unsure about your rights, contact Lawyers for Employee and Consumer Rights today. Our experienced California employment attorneys can review your severance package and help ensure your legal rights are protected. Call now for a free consultation. 

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