Severance Agreement Attorney San Francisco
When an employee is terminated, employers often ask them to sign a severance agreement. In exchange for waiving certain rights, they can be given additional pay or benefits beyond the final date of employment. With most employees, these agreements are standard, non-negotiable documents. With executives, however, their contracts may outline specific terms that must be included.
Why is a Severance Agreement Necessary?
Technically, a severance agreement is not required for most cases in California. A company can lay off or fire, or the employee can resign, without any additional paperwork unless termination pay is included in an executive contract, listed in the employee handbook, or there is a triggering event that is covered by the Warn Act.
Some executives have severance clauses in their contracts that dictate how the termination should be handled. These are negotiated before they are hired, and must be followed when the employer/employee relationship ends.
Severance agreements do play an important role for employers, though. The pay and benefits offered in these agreements are often given in exchange for a release of claims. This means that by accepting the agreement, the employee is agreeing not to sue the employer.
Why is it Important to Carefully Word Severance Agreements?
Termination agreements that are not written according to California legal standards may leave an employer at risk for litigation. The agreement, when worded correctly, will waive all state and federal claims the employee may have, to the extent the law will allow. This may include wrongful termination, breach of contract, harassment, discrimination and even emotional distress. Employers can also ask former employees to waive any unknown claims, but this must be done carefully. It is important to use the language that is outlined in the California Civil Code in order to ensure the waiver is legal. This is a major reason why it is important to have any agreement approved by someone who is familiar with California employment law.
If the proper language is not used in a severance agreement, the termination may cost your business much more than the monetary cost of the termination pay and extended benefits. One inadvertently mis-worded clause in an agreement can put the entire waiver at risk. This may mean the employee can make a claim against your company requiring an out of court settlement or litigation.
What Does California Law Say About Severance Agreements?
Some employee rights are protected under California labor laws. These include undisputed wage and hour claims, unemployment insurance and worker’s compensation benefits. In most cases, non-compete clauses are also illegal in California. In other states they are frequently used to preserve trade secrets. An agreement that contains a release of these claims or a non-compete clause is unenforceable in California, and may also leave the employer vulnerable to lawsuits.
In addition, California Labor Code says that an employer must honor a written termination agreement that is published in an employment handbook or contract. This means that the employer must, at minimum, provide the pay and benefits outlined in their official policy for employees upon termination.
How can an Experienced Attorney Help?
Because a severance agreement must conform to federal and state laws in order to be enforceable, it is important to consult with an experienced attorney before presenting the agreement to a former employee. Working with a lawyer familiar with local and federal labor codes and ensure your agreements can secure your objectives while also protecting your company from possible litigation.
Employees who are being terminated, or those who are laid off or resigning, may also want to consult an employment attorney before accepting a severance agreement offered by their employer. This is especially true if there is a known claim, such as unpaid overtime, misclassification or wrongful termination. Signing a severance agreement without first talking to a lawyer may cause you to waive your right to file a claim in the future.
Jordan Law Group has extensive experience with severance agreements in the San Francisco area. We assist clients by preparing termination packages, reviewing current standard severance agreements and negotiating employment agreements with executives. We can help to ensure your agreements are enforceable, and don’t leave you vulnerable to future litigation. Call us today to learn how our expertise can benefit your organization.