California Severance Agreement Requirements

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California severance agreement requirements include a written contract, consideration, a 21-day review time, a 7-day revocation, and compliance with labor laws. It must address wages, benefits, and release of claims, ensuring the employee's right to legal counsel. The agreement should comply with relevant labor laws, specifically those related to age discrimination and layoffs, to be enforceable. It is essential to provide the employee with a reasonable timeframe to review the agreement before signing, and any waivers of rights must be known and voluntary. Additionally, the agreement must not violate public policy. If the employee is 40 or older, it must comply with the Older Workers Benefit Protection Act, including a 21-day consideration period and a 7-day revocation period. Let's learn about several aspects of the California severance agreement requirements.

Key Points on California Severance Agreement Requirements

California severance agreement requirements are as follows:

• Voluntary Agreement : In California, an essential requirement for a severance agreement is that the decision to separate must be voluntary and not the result of coercion or undue pressure. This ensures that employees agree willingly and clearly understand its terms.
• Compensation: In California, a severance agreement is only legally binding once the employee obtains adequate consideration. Generally, the employee approves the terms articulated in the severance agreement in exchange for increased pay, perks, or other kinds of remuneration.
• Time for Review: In California, employees must review severance agreements within a reasonable timeframe before their signature. Usually, this period is established at least 21 days to provide employees the time to think about the terms and ramifications of the agreement.
• Revocation Period: To protect employees, California mandates a revocation period of at least seven days. This means that after signing the severance agreement, employees have seven days to reconsider and revoke their acceptance if they change their mind.
• Age Discrimination Waiver: For employees aged 40 and above, the severance agreement must include specific language addressing the waiver of age discrimination claims in compliance with the Older Workers Benefit Protection Act (OWBPA).
• Legal Review Encouragement: Employers are encouraged to advise employees to seek legal counsel before signing a severance agreement. This recommendation ensures that employees fully understand the agreement's implications and rights.
• Specific Disclosures: Severance agreements in California must include detailed disclosures about the impact on employee rights. This provides explicit information about the claims that the employee is waiving upon signing the agreement.
• Confidentiality & Non-disparagement: These are two clauses that are included in a lot of severance agreements. These terms specify that the employee will not speak poorly of the firm and maintain the confidentiality of particular information.
• Final Payment Information: The terms of the employee's final payments, including when they will be made and whether or not accumulated vacation or other benefits will be taken into account, should be outlined in the severance agreement.
• Labor Code Compliance: In California, a severance agreement must abide by all relevant labor regulations. This ensures that the agreement is legal and fair and follows the rights and protections afforded to employees under California law. Employers must navigate these requirements to create enforceable severance agreements that protect both parties' interests.

Rights Waived in California Severance Agreement Requirements

Common rights that may be waived in California severance agreements:

• Limitations on Civil Claims: Severance agreements in California can legitimately waive civil violations but not criminal charges. Commonly waived rights include the opportunity to sue for wrongful termination, harassment, or slander/defamation.
• Discrimination Claims: Employees may typically waive their capability to sue for unlawful discrimination based on a variety of grounds, which include gender, race, sex, age, religion, or sexual orientation. This waiver is a critical aspect of numerous severance agreements.
• Confidentiality Provision: Often included in severance agreements, a confidentiality provision restricts the employee from discussing the terms of the agreement or other matters with third parties. This safeguards sensitive information related to the separation.
• Trade Secrets Protection: Severance agreements may waive the right to discuss or disclose the employer's trade secrets. This is essential for protecting the company's proprietary information.
• Discussion of Termination Situation: Severance agreements often limit employees' ability to discuss the circumstances leading to their termination. This restriction helps manage the narrative surrounding the separation.
• Waiver of Known and Unknown Claims: Employees may waive the right to sue for both known and unknown claims, providing a broad release of potential legal actions related to their employment.
• Additional Waivable Issues: Beyond the commonly seen rights mentioned, employers might request employees to waive other specific issues. These could vary based on the nature of the employment, industry, or unique circumstances surrounding the separation.