Losing a job is rarely expected, and when a severance agreement accompanies termination, many employees feel pressure to sign quickly. Employers often present severance as a “take-it-or-leave-it” offer, implying that negotiation is not an option. In reality, severance agreements are frequently negotiable, and what is offered at the outset is not always the best or final offer.
For employees in Los Angeles and throughout California, understanding what severance is, what it may include, and what may be negotiated is essential before signing any document that could waive important legal rights.
What a Severance Agreement Really Is
A severance agreement is a contract between an employer and an employee, typically offered when employment ends. In exchange for certain benefits, such as severance pay, the employee is usually asked to sign a release of claims. This release often waives the right to sue the employer for issues such as discrimination, retaliation, harassment, wage violations, or wrongful termination.
Because the employer is asking for something valuable, legal protection from future claims, the employee has leverage. Severance is not legally required in most cases, but when an employer offers it, the terms are often negotiable.
Why Employers Offer Severance
Employers commonly offer severance to reduce legal risk. When an employee leaves under circumstances that could raise legal concerns, such as after complaints, medical leave, performance disputes, or restructuring, severance can be used to obtain a broad release of liability.
From the employer’s perspective, paying additional compensation may be cheaper than facing a lawsuit later. This dynamic creates room for employees to seek better terms.
Severance Pay Is Often Negotiable
Many employees assume the dollar amount listed in the agreement is fixed. In reality, severance pay is one of the most negotiable components.
Factors that can influence negotiating power include:
- Length of employment.
- Position or seniority level.
- Circumstances surrounding termination.
- Whether legal claims may exist.
- Past performance history.
Employees may request additional weeks or months of severance pay beyond the initial offer. In some cases, severance can be tied to years of service or structured as a salary continuation rather than a lump sum.
Continued Health Insurance Coverage
Health insurance is often one of the most critical concerns after termination. Severance agreements may offer continued employer-paid health insurance for a limited period or assistance with COBRA premiums.
Employees may be able to negotiate:
- A longer period of employer-paid COBRA coverage.
- Reimbursement of COBRA premiums.
- Continued coverage under the employer’s group plan.
For employees managing medical conditions or supporting family members, extended health coverage can be just as valuable as additional severance pay.
Payout of Bonuses, Commissions, and Earned Compensation
Severance agreements sometimes remain silent about bonuses, commissions, or other incentive compensation. California law requires payment of earned wages, but disputes often arise over what is considered “earned.”
Employees may be able to negotiate:
- Payment of earned but unpaid commissions.
- Prorated bonuses.
- Accelerated vesting of certain incentives.
- Clarification of final compensation amounts.
Failing to address these items in a severance agreement can result in lost income.
Neutral References and Employment Verification
Future job prospects matter. Some severance agreements include language limiting what the employer may say about the employee.
Employees can request:
- A neutral reference clause.
- An agreed-upon reference statement.
- Designation of a specific person for employment verification.
These provisions help reduce the risk that negative statements will harm future job opportunities.
Removal or Revision of Restrictive Clauses
Severance agreements often include provisions beyond payment and release.
These may include:
- Non-disparagement clauses.
- Confidentiality provisions.
- Non-compete or non-solicitation language.
- Broad cooperation requirements.
Some of these clauses may be overly broad or unnecessary. Employees may be able to negotiate narrower language or the removal of certain restrictions altogether.
Timing and Payment Structure
How severance is paid can matter. Some agreements provide a lump sum, while others pay over time.
Employees may be able to request:
- Lump-sum payment instead of installments.
- Faster payment timelines.
- Payment structure that minimizes tax impact.
Understanding payment terms helps avoid unpleasant surprises after signing.
When Severance Negotiation Is Especially Important
Severance negotiation becomes even more critical when termination follows events such as:
- Complaints about discrimination or harassment.
- Requests for medical or disability accommodations.
- Wage-and-hour complaints.
- Whistleblowing.
- Protected leave.
In these situations, the employee may have potential legal claims that significantly increase leverage. Signing a severance agreement without legal review could waive those claims permanently.
The Risk of Signing Too Quickly
Employers sometimes impose short deadlines, creating pressure to sign. California law requires waiting periods in certain situations, including age-related releases. However, even when no mandatory waiting period applies, employees can still request time to review the decision.
Once signed, a severance agreement is difficult to undo. Employees who later realize they waived valid claims may have little recourse.
How a Los Angeles Employment Law Attorney Can Help
An experienced employment law attorney can:
- Review the severance agreement.
- Identify problematic or overly broad provisions.
- Evaluate whether potential legal claims exist.
- Negotiate improved terms.
- Ensure the agreement complies with California law.
Legal review often results in better severance packages, even when employers initially resist negotiation.
Understanding the Bigger Picture
Severance agreements are not just about short-term pay. They shape an employee’s financial stability, future employment prospects, and ability to hold an employer accountable for wrongdoing.
Approaching severance thoughtfully, rather than reactively, can make a substantial difference in outcomes.
Leichter Law Firm represents employees in Los Angeles County and throughout California in severance negotiations and employment disputes. The firm focuses exclusively on employee-side employment law and understands how power imbalances affect workers during termination.
Taking the Next Step
Employees who receive a severance agreement do not have to navigate the process alone. A brief legal review before signing can uncover opportunities to improve terms and protect important rights.
Contact Leichter Law Firm, APC, for a free and confidential consultation to discuss severance negotiation options and determine whether the agreement being offered truly reflects the employee’s best interests.