How to Negotiate Severance Pay in California

How to Negotiate Severance Pay in California
Jun 22, 2017

If you are facing a lay-off, you are likely wondering whether you will be receiving severance pay. While many California employers want their departing employees to sign release forms in exchange for a severance package, they are not required by law to provide severance pay to anyone who is laid off or terminated (some exceptions apply). However, if your employer has provided you with a severance package, you should consider negotiating your severance and release terms.

What is Severance Pay?

Severance pay can often be provided by your employer if you or other employees are laid off, fired, or even voluntarily resign. Severance packages typically include both a continuation of money and benefits. Unless an employment policy or contractual obligation is in place, employers in California are not required to provide severance packages to employees. However, if your employer provides you with a severance package, it is important to understand the terms and negotiate them if needed.

Steps for Negotiating Severance Packages in California

Examine the Release Terms

Your severance pay contract should describe precisely the amount of money or other benefits that you will receive from your employer. The document should also state whether you will get a lump sum, monthly pay, weekly pay, etc. and the date on which the payments and benefits will stop. Additionally, your release will likely contain a confidentiality provision, and sometimes a non-disparagement clause. Other provisions in the release terms could also include non-disclosure, return of company property, choice of law, and confidentiality clauses. If you find that anything seems off, or that the release does not thoroughly explain each provision or the severance package your employer will provide, you should consult a California employment attorney before signing on the dotted line.

Think About Your Other Employee Benefits

Remember that you could have been receiving other benefits while employed. Do you have vacation days that you were not able to take? Think about negotiating with your employer on cashing in those days that are unused. Do you know what will happen to your 401k account, stocks or pension? What about your health insurance? Make note of the dates that health coverage may expire. If your severance pay package fails to include health insurance, you may be able to negotiate extended coverage with your employer.

Understand FMLA and Severance Pay

The Family and Medical Leave Act (FMLA) and California Family Rights Act (CFRA) entitle eligible employees of covered employers to take up to 12 weeks of unpaid leave within a 12-month period to care for a child, or to care for themselves due to serious health conditions, or even help other family members who have health issues. Basically, FMLA and CFRA provide many employees with these benefits without fear of being terminated from their jobs.

Your employer probably thinks that 12 weeks of work leave is quite a substantial amount of time to be without you – even if you are not paid during the leave. Your employer may be more open to negotiating a severance package if you speak up about your desire for FMLA. This is because employers often think they could lose employees after they take their leave of absence. Thus, with advance notice, your employer will be able to find your replacement sooner rather than later – a win for everyone involved.

Severance and Wrongful Termination

It is unlawful for California employers to fire employees due to race, gender, national origin, disability, religion, sexual orientation, pregnancy, age or in retaliation. If you are being illegally forced out of your job by your employer, you may be able to file a workplace discrimination or wrongful termination claim. If you feel that your employer is violating California employment laws, do not sign that severance contract. Instead, consult an experienced employment lawyer to discuss your case today.

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