California's WARN Act Layoff Wave: What to Know Before You Sign That Severance Release, by Judith C. Wolff

California is in the middle of a sustained layoff cycle. State WARN Act filings have run well above pre-pandemic norms for several years running, with manufacturing, tech, and biotech among the hardest-hit sectors. As of January 1, 2026, Senate Bill 617 changed your employer's obligations. If your employer has 75 or more workers and is laying off 50 or more at a single site, you're generally entitled to 60 days' written notice before the termination date — and if they skip it, you may be owed back pay and benefits for the notice period.

But the notice is just the opening move.

Most laid-off employees are then handed a severance agreement, and the pressure to sign quickly is real. Slow down. Here's what actually matters.

Nothing in California or federal law requires an employer to offer severance at all. When they do, it's because they want something back — almost always your signature on a broad release of claims. Compensation-survey data (including work cited to Mercer and WorldatWork) points to a tiered pattern: roughly one to two weeks of pay per year of service is standard for non-management employees; that often climbs to four or more weeks per year of service at the management level; and executives are typically on a different structure altogether — a flat fixed term (commonly three to twelve months, and up to twenty-four months at the CEO level) rather than a strict per-year-of-service formula, though some individual company policies do use a one-month-per-year formula for executives.

If what's on the table is well below the range for your level and you have any colorable claim, there may be room to negotiate.

Money now versus rights later. A severance agreement is a contract: you're trading a release of legal claims for a payment (or enhanced payment) you're not otherwise guaranteed. Read the "consideration" clause carefully — if you're only getting what you already earned (final wages, accrued vacation), that's not new consideration, and California law requires wages already earned to be paid regardless, under Labor Code sections 201 and 203, with penalties for late payment.

Age 40 and over: you get extra time and extra disclosures. Under the federal Older Workers Benefit Protection Act, employees 40+ are entitled to at least 21 days to consider an individual severance offer (45 days in a group layoff), plus a 7-day period after signing to revoke. Don't let anyone rush you past these windows — a release signed under a shortened deadline may not be enforceable against age claims.

What the group-layoff disclosure does and doesn't cover. In a group termination or exit incentive program, the OWBPA does require the employer to disclose the ages and job titles or positions of everyone in the "decisional unit" — both those selected for layoff and those who weren't. That's the only demographic disclosure the law mandates. Employers are not required to disclose race, sex, disability status, or other demographic breakdowns of who was let go versus retained. If you suspect the selection pattern skewed along one of those lines, the age/title disclosure won't show it directly — you'd generally need to request that data separately or develop it through discovery if a claim is filed.

Misclassification claims aren't automatically covered by a general release. If you were treated as exempt or as an independent contractor and believe you were misclassified, a broad release of "all claims" doesn't necessarily waive the unpaid wages that misclassification generated — overtime, missed meal and rest period premiums, and the like. Under Labor Code section 206.5, an employer cannot condition payment of wages concededly due on a signed release, and general releases are read narrowly against sweeping in specific, disputed wage claims unless the agreement contains language that specifically identifies the misclassification dispute and apportions consideration to it.

If your severance agreement doesn't call out the issue by name and allocate part of the payment to resolving it, you may have a real argument that the claim survived the release.

If you're evaluating whether to raise it: the look-back period for most wage claims is three years (Code of Civil Procedure section 338), or four years if brought as an Unfair Competition Law claim under Business and Professions Code section 17200, and willful misclassification carries its own civil penalties of $5,000 to $25,000 per violation under Labor Code section 226.8. Potential damages include unpaid overtime, meal and rest break premiums, interest, waiting-time penalties under sections 201/203, and liquidated damages under section 1194 — which is part of why employers who are aware of exposure often prefer a release that never mentions it by name.

What you can't sign away. California's Silenced No More Act (SB 331) prohibits severance agreements from restricting your ability to discuss workplace harassment, sexual assault, or any other conduct you reasonably believe is unlawful. Broad non-disparagement or confidentiality clauses reaching into those topics are void. You also generally cannot release PAGA representative claims in a pre-litigation severance agreement, though individual PAGA claims may be releasable depending on how the agreement is drafted post-Viking River Cruises and Adolph v. Uber.

Read the waiver language. Most releases include a waiver of Civil Code section 1542, which otherwise preserves unknown claims. Signing it means you're giving up claims you don't yet know you have — including ones related to the layoff itself, if it turns out you were selected for a discriminatory or retaliatory reason. The scope of 1542 is huge. It is important to clarify before signing any release whether you have legally cognizable claims that the severance amount does not cover.

Before you sign: confirm your last paycheck is accurate and timely, ask whether you're eligible for COBRA and unemployment (signing a release does not disqualify you from unemployment benefits), and consider having an employment attorney review the agreement — particularly if you raised any complaints, requested any accommodation, or suspect you weren't selected for purely economic reasons.

If you sign and change your mind: You typically have seven days to revoke.