If you have been offered a severance agreement by your employer, you might be wondering whether you are legally required to sign it and what happens if you don’t sign it.
In this article, we take a look at the implications of not signing a severance agreement in California and the legal considerations in severance agreements that you should be aware of.
👉Also Read: Understanding Severance Agreements: Insights from Hershey Law
Am I Legally Required to Sign a Severance Agreement in California?
No. Under California law, it’s not mandatory for you to sign a severance agreement – regardless of your position, job responsibilities, and the industry you work in. In fact, the law states that a severance agreement is valid only if the parties involved voluntarily enter into it.
What Happens If I Don’t Sign a Severance Agreement?
The consequences of not signing a separation agreement might include:
Foregoing Severance Benefits: The most immediate consequence of not signing a severance agreement is the loss of severance benefits offered by your employer – including severance pay, continuation of health insurance and other benefits, outplacement services, and other forms of compensation outlined in the agreement.
Preservation of Legal Rights: Severance agreements generally contain clauses that require the former employee to waive their right to sue their employer for any employment or termination related claims. By not signing the agreement, you can retain your right to pursue legal action against your employer for discrimination, harassment, wrongful termination, breach of contract, and various other reasons.
Negotiation Leverage: Refusing to sign the agreement can provide leverage for negotiation with your employer. You might be able to negotiate more favorable terms including a better severance package, limiting the scope of non-disclosure, non-disparagement, non-compete and non-solicitation clauses, and more.
You should know that whether or not you sign the severance agreement, your employer is legally obligated to pay you all the wages you are owed – including accrued vacation time – in accordance with California labor laws. They cannot withhold your wages and other benefits you are entitled to and force you to sign the agreement under any circumstances.
Key Legal Considerations in Severance Agreements
Release of Claims: Severance agreements in California often include a release of claims clause, wherein the employee agrees not to sue their employer for any employment or termination related claims. It’s crucial to understand the scope of this release and its implications on your right to pursue legal action against your former employer for violations of state and federal law.
Confidentiality: Confidentiality provisions prohibit you from disclosing the terms of the agreement or any confidential information about your former employer.
Non-Disparagement: Non-disparagement provisions prohibit you from making negative or disparaging statements about your former employer, the company, their representatives, or their business practices.
Non-Compete and Non-Solicitation: Non-compete provisions restrict you from working for your employer’s competitors or starting a competing business. Non-solicitation provisions restrict you from soliciting your former employer’s clients or employees for a specific period of time after termination.
It should be noted that California law severely restricts the rights of employers to include the aforementioned clauses in severance agreements. These clauses can be included and enforced only under very specific circumstances. Still, many employers tend to include these provisions in severance agreements, as they know that most employees do not understand these provisions and even if they do, they might be hesitant to challenge these provisions in court.
👉Also Read: 3 Reasons Everyone Needs an Employment Attorney
Our Experienced California Severance Agreement Lawyers Can Protect Your Rights!
At Hershey Law, we have extensive experience in drafting, reviewing, and negotiating severance agreements for employees from a diverse range of industries. We know what kind of restrictive and unlawful clauses that employers try to sneak into these agreements and we know how to negotiate better terms for you.
Remember – severance agreements represent more than just a financial package. They can impact your future employment and entrepreneurial prospects in more ways than you can imagine. Our seasoned California employment law attorneys can review your agreement, tell you whether it’s in your best interest to sign it, and advise you on the best course of action to take.
Call us today at 424-378-5616 or get in touch with us online to schedule a free consultation with one of our trusted California severance agreement lawyers.
