When parting ways with an employer in California, you might be presented with a severance package. Understanding the typical terms in such an agreement is crucial. Here are eleven standard elements you should be aware of in a severance package. Contact PLBH at (800) 435-7542 if you have questions for an employment law attorney or if you believe you have been the victim of wrongful termination.
1. Release of Legal Claims
A central element of most severance packages is the release of legal claims. By signing, you waive certain legal rights against your employer, such as claims for discrimination, wrongful termination, and other employment-related issues. However, remember that some rights cannot be waived through such an agreement.
2. Severance Pay
Severance pay, often a significant portion of the package, is compensation provided to induce you to sign the release. The form of this compensation varies, including lump-sum payments, continued salary payments, or other benefits. The exact amount can depend on factors like your tenure with the company.
3. Non-Competition Clause
Non-competition clauses restrict your ability to engage in certain activities that could compete with your former employer. However, the enforceability of these clauses varies by state, and in some areas, like California, they are largely prohibited.
4. Confidentiality Agreement
Confidentiality agreements are standard, especially if you had access to sensitive company information. These agreements bind you to keep this information private, with specified penalties for breaches.
5. Non-Disclosure Agreement
Similar to confidentiality agreements, NDAs in severance packages restrict your ability to disclose certain aspects of your employment. It’s essential to clearly understand the terms to avoid future legal complications.
6. Non-Disparagement Clause
Many employers include clauses that prohibit you from making negative statements about the company post-termination. Violating these clauses can lead to legal consequences.
7. Non-Solicitation Provisions
These provisions prevent you from soliciting your former colleagues or clients. They are designed to protect the employer’s workforce and client base from being influenced by former employees.
8. Continued Health Insurance
Some severance packages offer a continuation of health insurance benefits for a certain period, providing a valuable buffer during your transition.
9. Job Training or Transitional Services
Occasionally, severance agreements include provisions for job training or career coaching to assist you in transitioning to new employment opportunities.
10. Unemployment Benefits
An agreement from your employer not to contest your unemployment benefits can be a part of your severance package, helping secure these benefits more easily.
11. Job Recommendation
Getting a recommendation letter or a promise of a positive reference can be a significant advantage, especially if the termination circumstances could otherwise impact your professional reputation.
Understanding the Employer’s Motivation
It’s essential to recognize that severance packages are often offered to settle potential legal claims against the employer out-of-court. While they may sometimes be used to reward long-time service, the primary goal is typically to ensure a smooth and dispute-free parting.
Rights You Can’t Waive
Certain legal rights, such as claims for unpaid wages, cannot be waived in a severance agreement. Understanding these non-waivable rights is crucial when reviewing and negotiating your severance package.
Severance packages can be complex, and each element carries its own implications. If you’re navigating a severance package, consider consulting with PLBH for expert advice tailored to your situation.