Losing a job can be a stressful and uncertain experience, especially when employees are unsure about their financial security after a layoff. One of the biggest questions workers face is whether they are entitled to severance pay and when they should expect to receive it. While severance pay can provide crucial financial support, California law does not require employers to offer it in most cases. Based on this, many companies provide severance packages based on employment contracts, company policies, or negotiated agreements.
👉Also Read: Should You Sign a Severance Agreement? Key Considerations and When to Walk Away
Do You Get Severance If You Get Laid Off?
In California, unlike some states, there is no legal requirement for employers to provide severance pay. Based on this, many companies voluntarily offer severance packages under specific conditions. Whether an employee qualifies for severance depends on several key factors:
Employment Contracts
Some employees have written employment contracts that explicitly outline severance terms. If your contract includes a clause stating that you will receive severance pay in the event of a layoff, your employer is legally required to honor that agreement. It’s critical to carefully review your employment contract and consult with an employment attorney if you believe your employer is failing to uphold their obligations.
Company Policies
Many businesses, particularly larger corporations, have established severance policies in place. These policies generally provide more severance pay to employees based on factors such as length of service, job position, or company-wide layoffs. If your employer has an official severance policy, they’re obligated to follow it, even if severance isn’t required by law.
Collective Bargaining Agreements (CBAs)
Unionized employees may be entitled to California severance pay under the terms of their collective bargaining agreement (CBA). Unions may negotiate severance benefits as part of their employment contracts, ensuring that laid-off workers receive compensation to help them transition to new employment. If you’re a union member, check with your union representative to determine your eligibility.
Voluntary Agreements and Negotiated Severance Packages
Some employers provide severance pay as a goodwill gesture to maintain positive relationships with former employees or to protect the company’s reputation. Employers may also offer severance in exchange for employees signing a release of claims, which prevents them from suing the company for wrongful termination or other employment-related disputes. Employees should carefully review the terms of any severance agreement before signing, as they may be giving up important legal rights.
WARN Act and Severance
The California Worker Adjustment and Retraining Notification (Cal-WARN) Act requires certain employers to provide at least 60 days’ notice before mass layoffs, plant closures, or relocations. If an employer violates this law by laying off workers without proper notice, affected employees may be entitled to back pay and benefits. In some cases, a fair severance package may be offered as a remedy for failing to provide the required notice under the WARN Act.
👉Also Read: Red Flags in Your Severance Agreement: What to Look Out For
When Should Severance Pay Be Paid?
The timing of severance payments depends on the terms set by the employer and the structure of the severance package. Pertaining to this, general best practices include:
Lump-Sum Payments
Most employers provide severance packages typically as a one-time lump sum, which may be issued on or near the date of the employee’s final paycheck. This method allows employees to receive their full severance payment immediately, which can help cover expenses while they search for new employment.
Installment Payments
Some severance agreements outline payments over a set period, such as monthly distributions for three to six months after termination. Employers may prefer this method to manage cash flow while still providing financial assistance to laid-off employees. Employees should be aware that installment payments may affect their eligibility for unemployment benefits.
Contractual Obligations and Severance Timelines
If severance is part of a written employment contract, the employer must comply with the specified payment schedule. Employees should review the terms carefully to ensure their employer meets their obligations. If an employer delays or fails to provide promised severance pay, affected employees may have legal grounds to pursue a claim for breach of contract.
How to Negotiate a Severance Agreement
Even if an employer is not required to provide severance under state or federal law, employees can usually negotiate a severance package. Here are some tips for securing the best possible agreement:
- Understand Your Value: Consider your tenure, contributions to the company, and any legal leverage you may have (such as potential wrongful termination claims).
- Review the Agreement Carefully: Employers may include restrictive clauses in severance agreements, such as non-compete or non-disparagement clauses. Make sure you fully understand the terms before signing.
- Seek Legal Advice: A skilled employment attorney as an employee’s representative can help you negotiate better terms and identify any legal violations in the agreement.
- Leverage Unpaid Benefits: If you have unused vacation pay, bonuses, or commissions, consider negotiating them as part of your severance package.
- Negotiate Continued Benefits: Employees can sometimes negotiate continued health insurance coverage or other benefits, including outplacement services, for a transition period.
What to Do If Your Employer Fails to Pay Promised Severance
If your employer agreed to provide a certain amount of severance pay but has not followed through, you have several options:
- Request Payment in Writing: A formal letter or email outlining the agreed severance terms and requesting immediate payment may resolve the issue.
- File a Wage Claim: If severance pay was part of a contractual obligation, you may be able to file a wage claim with the California Division of Labor Standards Enforcement (DLSE).
- Pursue Legal Action: If an employer refuses to pay severance that was contractually promised, you may have grounds for a lawsuit. Hershey Law can help assess your case and explore legal remedies to recover the compensation you are owed.
Does Severance Pay Affect Unemployment Benefits?
Employees receiving severance may wonder whether it impacts their ability to collect unemployment benefits from the California Employment Development Department (EDD). Here’s how it works:
- Lump-Sum Payments: If severance is provided as a lump sum for past service, it typically does not affect unemployment benefits.
- Payments in Lieu of Work: If severance is structured as continued salary payments, it may delay unemployment eligibility until payments stop.
- Company-Specific Agreements: Some employers report severance differently, so it’s always best to check with the EDD if you are uncertain.
👉Also Read: When It’s Best to Hold Off on Signing a Severance Agreement: 5 Cases to Consider
How Hershey Law Can Help You Secure Fair Severance Pay
At Hershey Law, we understand the importance of securing fair compensation for employees who have been laid off. Whether your employer has refused to pay severance, offered an unfair amount, or delayed payment, our experienced employment attorneys are here to protect your rights and fight for what you’re entitled to.
Review Severance Agreements
Many employees are unaware of their rights when it comes to severance agreements. Employers often present these agreements with complex legal language that may include waivers of important rights. Our legal team meticulously examines severance agreements to determine whether they are:
- Fair and reasonable – We ensure that the offered severance package aligns with industry standards and compensates you adequately.
- Legally enforceable – Some agreements may contain clauses that violate California labor laws, making them unenforceable.
- Free from unfair conditions – Employers sometimes insert clauses that prevent employees from taking legal action against wrongful termination, unpaid wages, or workplace discrimination.
If we find that the severance agreement is unfair or contains illegal provisions, we can negotiate on your behalf to secure better terms.
Negotiate for Better Compensation
Severance pay is often negotiable, and our attorneys have extensive experience advocating for employees to receive fair compensation. We negotiate for:
- Higher severance payments – Based on your years of service, job level, and industry standards, we work to secure a more substantial payout.
- Extended health insurance benefits – Losing employer-sponsored health insurance can be a significant concern. We push for continued coverage through COBRA or employer-paid benefits.
- Favorable payment terms – Whether you prefer a lump sum or structured payments, we ensure that the severance arrangement suits your financial needs.
- Additional compensation – We assess whether you are entitled to unused vacation pay, bonuses, or commissions that should be included in your severance package.
By negotiating directly with your employer or their legal representatives, we increase your chances of receiving a severance package that truly benefits you.
File Legal Claims for Unpaid Severance
If your employer has promised severance pay and failed to deliver, you may have legal grounds to file a claim for unpaid compensation. Hershey Law takes swift action by:
- Sending demand letters – A formal legal notice to your employer outlining their obligations and demanding immediate payment.
- Filing a lawsuit – If the employer refuses to comply, we file legal claims to recover the severance pay you are owed.
- Seeking penalties for non-payment – Under California law, employers may face financial penalties for failing to honor their severance agreements.
- Pursuing additional damages – If your layoff violated employment laws, we explore claims for wrongful termination, discrimination, or labor law violations.
Our legal team is prepared to take aggressive action to ensure you receive the compensation you are entitled to.
Ensure Compliance with Labor Laws
In some cases, a layoff may involve violations of California or federal labor laws. Beyond securing severance pay, we investigate whether your employer failed to comply with:
- The WARN Act – If your employer conducted a mass layoff or plant closure without providing 60 days’ notice as required under the California WARN Act, you may be entitled to additional compensation.
- Wrongful Termination Laws – If you were laid off due to discrimination, retaliation, or other unlawful reasons, we fight for your reinstatement or financial damages.
- Wage and Hour Laws – Employers must pay all final wages, including unpaid overtime and commissions, at the time of termination. If they failed to do so, we hold them accountable.
By taking a comprehensive approach, we ensure that all legal avenues are explored to protect your rights and maximize your compensation.
👉Also Read: Navigating Severance Agreements: Key Considerations for C-Level Executives
How to Get Started with Hershey Law
If you’ve been laid off and are facing issues with severance pay, taking immediate action is crucial. Hershey Law offers:
- Free consultations – We evaluate your case and guide your options.
- No upfront legal fees – We work on a contingency fee basis, meaning you don’t pay unless we recover compensation for you.
- Personalized legal strategies – Every case is unique, and we tailor our approach to achieve the best possible outcome for you.
Our California employment law attorneys are committed to standing up for California employees and ensuring they receive the compensation they deserve after a layoff. Don’t let your employer take advantage of you—reach out to Hershey Law today to protect your rights and receive fair severance pay. To schedule your free consultation, call us at 310-929-2190 or contact us online.
