Employers often present severance agreements during termination meetings and give workers limited time to review them. California generally does not require severance pay, so the terms are often negotiable. Before you sign, watch for language that may limit your rights or future job options.
Overly broad non-compete clauses
California generally limits non-compete agreements, with only narrow exceptions. A severance agreement should not broadly bar you from working for another employer or continuing in your field. If the restriction seems too wide, it may be a red flag.
Overly broad confidentiality and non-disparagement terms
Confidentiality clauses may protect trade secrets and private business information. But they should not be so broad that they limit lawful conduct. A non-disparagement clause can also be a problem if it appears to block you from reporting unlawful conduct, talking with government agencies or exercising other protected rights.
Overly broad release of claims language
Many severance agreements ask workers to release claims tied to their employment. Read this section closely. You should understand what rights you are giving up and what rights stay protected. In some cases, you may still have the right to file a charge with a government agency or take part in an investigation.
Very short review periods
If you are age 40 or older and asked to waive age discrimination claims, federal law usually gives you at least 21 days to review the agreement. In some group termination situations, that period may be 45 days. You also may have seven days to revoke after signing. Even if those rules do not apply, a short deadline can make it harder to review the terms carefully.
Protect your rights before signing
A severance agreement can affect your legal rights, your ability to speak about your former job and your future work opportunities. Review the release, confidentiality terms, non-disparagement language, payment terms and deadlines before you sign. If anything is unclear, an employment attorney can help you understand the risks and options.