Should You Sign a Severance Agreement? What to Check First
Disclaimer: The information provided in this article is for general informational and educational purposes only. It is not intended to constitute legal advice and does not create an attorney-client relationship. Statutes of limitations and legal rights can vary based on specific facts and circumstances. The information contained herein can change due to changes in the law. You should not rely on this information without consulting a qualified attorney about your particular situation.
A severance agreement can feel like a lifeline after losing a job — but signing it means giving up legal rights, sometimes including a valuable claim you did not know you had. Before you sign anything in California, here is what to check.
Don’t rush — you usually have more time than they imply
Employers often present severance with a tight deadline to discourage you from getting advice. Some deadlines are real; many are negotiable. Almost always, you have time to read carefully and have the agreement reviewed before signing.
The 21-day / 45-day rule (and 7-day revocation) for workers 40+
If you are 40 or older and the agreement asks you to waive age-discrimination claims, federal law (the Older Workers Benefit Protection Act) requires the employer to give you at least 21 days to consider it — or 45 days if the severance is part of a group layoff. You also get 7 days to revoke after signing. If the employer did not give you this time, the waiver of age claims may be invalid.
What you’re giving up: the rights you waive
In exchange for severance pay, you typically release all claims against the employer — including wrongful termination, discrimination, harassment, and retaliation. If you believe you were treated illegally, that potential claim may be worth far more than the severance offered, which is why a review matters before you sign it away.
7 terms to check before signing
- The severance amount and payment schedule — is it lump sum or installments?
- Whether accrued, unused vacation is paid out (California law requires it, separate from severance).
- Health coverage and COBRA continuation.
- Non-disparagement and confidentiality clauses — California limits these where unlawful conduct is involved.
- Any non-compete or overbroad restriction (most non-competes are void in California).
- The scope of the release and whether it waives claims you may not know about.
- Return-of-property, references, and rehire terms.
Is the severance amount negotiable? (usually yes)
Severance is frequently a starting offer. With leverage — length of service, a potential legal claim, or unusual circumstances — you may be able to negotiate a larger payment, extended benefits, or a neutral reference. An attorney can often negotiate on your behalf without you having to confront your former employer directly.
Red flags that mean you should call a lawyer first
If you were fired after complaining about harassment or discrimination, denied accommodations, owed wages, or pushed out under intolerable conditions, do not sign until a lawyer reviews it. Signing may waive a claim worth much more than the severance check.
Frequently Asked Questions
Should I sign a severance agreement?
Not before you understand what you are giving up. If you may have a legal claim, or the terms are unclear or one-sided, have an attorney review it first — signing releases your right to sue.
How long do I have to sign a severance agreement in California?
If you are 40+ and waiving age claims, you must get at least 21 days (or 45 in a group layoff) to consider it, plus 7 days to revoke after signing. Other deadlines may be negotiable.
Can I negotiate my severance package?
Often, yes. Severance is frequently a first offer. Length of service or a potential legal claim can be leverage to negotiate more pay, benefits, or a better reference.
What should I look for in a severance agreement?
The payment terms, vacation payout, health coverage, the scope of the claims you are releasing, and any restrictive clauses like non-disparagement or non-competes (most of which are void in California).
Should I have a lawyer review my severance agreement?
Yes, especially if you suspect illegal treatment or the amount is significant. A review is usually quick and inexpensive relative to the rights you may be signing away.
Talk to a San Diego Attorney — Free Consultation
Tan Ngo Law Firm helps San Diego clients with wrongful termination and severance matters and related matters. Consultations are free and you pay nothing unless we win. Call 1-760-230-9562 or request a free case evaluation online.
