Updated: Dec 27, 2022
A Checklist for Employees
When terminating employees, employers typically propose a severance agreement on a take-it-or-leave it basis, demanding an employee sign and return the agreement within a short period of time if he/she/they want to receive severance money. This puts a lot of added pressure on a person who is already experiencing the tremendous stress of getting fired. The typical severance agreement I am seeing these days offers a small amount of money subject to taxes and withholding, as well as a host of other terms and conditions that are designed to protect the employer, not the employee. Employees who are forty and older must be given twenty-one days to consider a severance agreement. A minimum of five days’ consideration is mandatory for those under forty. Whether the monetary severance offer is acceptable is a personal decision, and since employers are generally not legally required to make any kind of severance offer (absent collective bargaining agreements or pre-employment contracts), I leave those decisions up to my clients' discretion.
Obviously, it's in an employer’s best interests to convince an employee to sign a severance agreement which will protect the employer from getting sued. Such agreements are often not in employees’ best interests, however, because they are either silent on or erode first amendment rights of freedom of speech (and set out a litany of forbidden acts.) To balance the playing field just a little bit, and leaving aside completely the subject of how much to settle for, I’d like to quickly outline a list of items to look for and consider asking your employer to fix before you agree to sign a contract that will bind you for the rest of your life.
Before signing anything, request your personnel file and let your employer know there is some urgency to the request. Assuming there is nothing unexpected in the file, consider these alterations to the release:
1.) Insist on a mutual release. Severance agreements usually release only the employer from future claims.
2.) Insist on mutual non-disparagement.
3.) If the release you are considering contains a nondisparagement and/or confidentiality clause (most agreements do), Make sure the required SB 331 language is in the release, to the effect that “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.” This change in California law took effect on January 1, 2022.
4.) Request a provision to the effect that the employer will not contest your claim for unemployment benefits should you decide to make one.
5.) Request a provision setting out the procedure for obtaining confirmation of employment for future employers. Provide a stipulation that the employer will limit disclosures to dates of employment and position held.
6.) Non-compete clauses are not enforceable in California, but many employers still don’t seem to know that. Ask for such a clause to be struck.
7.) For employees who are terminated after filing a claim against the employer, under AB 749 no-rehire agreements are illegal and unenforceable in California, but many employers (and lawyers) continue to include them in severance agreements. If the agreement contains a no-rehire provision, ask your employer to justify it in light of AB 749.
8.) Consider requesting a letter of recommendation from a person with whom you work and trust as a condition of settlement with the employer.
9.) It's a minor point, but electronic signatures are acceptable everywhere these days. A company that insists on an ink-and-mailed agreement is a dinosaur.
10.) Ask the employer to agree to no longer than a 14-day payment time. Payment of the severance amount is due within fourteen days after the expiration of the revocation period (typically seven days).
For these and other questions, please call me. The first consultation is always free. 925-378-3896.