Severance Agreements in California: What to Check Before You Sign

Quick Answer: A severance agreement in California is a contract. In exchange for a payment, you agree to release your employer from your right to sue over claims connected to your employment. Before you sign, three protections apply regardless of your age or role. Every employee, not just those 40 or older, must get at least 5 business days to review the agreement and be notified of the right to consult an attorney, under California’s Silenced No More Act. If you’re 40 or older and the release covers age claims, federal law extends that to 21 days (45 in a group layoff), plus 7 days to revoke after signing. And parties can never release certain things at all: earned but unpaid wages, workers’ compensation claims, unemployment benefits, and, generally, PAGA representative claims on behalf of other employees.

At TONG LAW, we review and negotiate severance agreements for senior professionals throughout Oakland, Sacramento, and the San Francisco Bay Area, so we know which clauses are standard and which ones are asking for more than the payment justifies.

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A severance agreement in California is a contract. In exchange for the monetary amount that the employer agrees to pay you, you agree to forever release the employer from your right to sue them for any legal claims you may have against them. 

That trade is the entire document, and every clause either widens what you are giving up or narrows what you are getting. 

Before you sign, the question is not whether the number looks reasonable. It is whether the number reflects what your claims and your obligations are actually worth.

For directors, VPs, and senior individual contributors in tech, healthcare, and finance, the stakes extend well beyond the payment itself. Unvested equity, bonus eligibility, references, and restrictions on what you can say or where you can work next. 

The Release of Claims is the Whole Deal

The release of claims is the provision your employer cares about most. It typically waives every claim you could bring arising from your employment, including discrimination, retaliation, and wrongful termination claims.

Before signing, confirm three things:

What You are Releasing 

A general release covers known and unknown claims. Usually with a Civil Code § 1542 waiver that extends the release to claims you don’t yet know exist.

What Cannot be Released

Certain rights survive any severance agreement in California, including earned but unpaid wages, workers’ compensation claims, and unemployment benefits. You generally cannot waive PAGA representative claims where you would otherwise sue on behalf of other affected employees, not just yourself, in a pre-dispute agreement either. Though the line between what can and can’t be released has gotten more technical since Viking River Cruises v. Moriana (2022) and Adolph v. Uber Technologies (2023). If your severance package touches on Labor Code violations affecting more than just you, that’s worth flagging before you sign. See our guide to PAGA claims in California for how those work.

Whether You Have Claims Worth More Than the Offer

If your termination followed a protected leave, an internal complaint, or a suspicious pattern, the release may be waiving claims worth far more than the severance on the table.

In our experience, the timing tells the story. When an employer offers an unusually generous package with an aggressive signing deadline, it’s often because someone in legal has already identified the risk you’re being asked to release.

The Mandatory Review Period 

Most severance advice online only discusses the age-40 review window, because it’s federal law and well documented. But California has its own, broader rule that applies to every employee, regardless of age.

Under the Silenced No More Act (Gov. Code § 12964.5), any employer offering a severance or separation agreement must:

• Notify you of your right to consult an attorney about the agreement, and
• Give you a reasonable review period of at least 5 business days before you’re required to sign.

You can sign sooner if you want to. The choice is yours. An employer cannot make the deadline shorter than 5 business days. This applies to every separation agreement, not just ones tied to a discrimination or harassment complaint.

If you’re 40 or older and the release covers age discrimination claims, a separate federal law, the Older Workers Benefit Protection Act (OWBPA), extends this further:

• 21 days to consider the agreement individually, or 45 days if it’s offered as part of a group layoff or termination program, plus
• 7 days to revoke after signing, during which the agreement isn’t yet effective.

In a group layoff, the OWBPA also requires the employer to disclose the job titles and ages of everyone in your “decisional unit”, who was let go and who wasn’t. This so you can evaluate whether the layoff had an age-related pattern.

Two practical points follow. 

First, a deadline shorter than these windows may itself be a red flag worth raising. 

Second, the review period exists so you can use it, signing on day two of a 21-day window forfeits leverage for no benefit. 

In our experience, the first offer is rarely the final one, particularly where the departure follows a protected activity or an equity vesting date. 

If your exit was part of a larger layoff, it may also trigger separate notice obligations under the California WARN Act, which is worth checking alongside your severance timeline.

Clauses that Deserve a Second Read

Beyond the release, several provisions carry consequences that outlast the payment.

Non-Disparagement Clauses 

California law limits how far these can reach. Under the Silenced No More Act, a non-disparagement provision cannot have the purpose or effect of denying you the right to disclose information about unlawful workplace conduct. And the agreement must include language to that effect, something to the effect of: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.” A non-disparagement clause missing that carve-out, or one broad enough to cover it anyway, is unenforceable to that extent.

Confidentiality Provisions

Check what is confidential: the agreement terms, the circumstances of your departure, or both. Overbroad language can complicate future job interviews and reference conversations. The settlement or severance amount can generally still be kept confidential, it’s the disclosure of unlawful conduct that can’t be gagged.

Non-Competes, they’re Already Void, and the Rules Just Got Sharper 

Post-employment non-compete clauses have been void in California since 1872 under Business & Professions Code § 16600, with narrow exceptions (mainly tied to the sale of a business). 

What changed in 2024: 

Under AB 1076 and SB 699, if you signed a non-compete after January 1, 2022, your employer was required to send you individualized written notice, to your last known address and email, by February 14, 2024, telling you the clause is void. 

A failure to send that notice is itself an act of unfair competition under Business & Professions Code § 17200, and AB 1076 created a private right of action for violations. 

If your severance agreement still contains a non-compete clause, or you were never notified an earlier one was void, that’s worth raising directly. 

This is distinct from an ordinary employee non-solicitation clause, restricting you from recruiting former colleagues, which is generally still enforceable and analyzed separately from the non-compete rules.

Equity Treatment

The agreement should state exactly what happens to unvested RSUs, options, and any pending bonus. Silence usually means forfeiture. For senior professionals, this line item is frequently worth more than the cash severance.

Cooperation and Non-Solicitation Terms 

Ongoing obligations to assist in litigation, or restrictions on recruiting former colleagues, have real costs and should be scoped narrowly.

References and Announcement Language 

A negotiated neutral reference or agreed departure statement costs the employer nothing and protects your reputation. If it isn’t in the agreement, it doesn’t exist.

Frequently Asked Questions

Do I have to sign a severance agreement in California?

No. Severance is voluntary on both sides unless an employment contract or company policy already guarantees it. Declining to sign means declining the payment, but it preserves your legal claims. The right choice depends on whether your claims are worth more than the offer.

How much severance should I get in California?

No statute sets a required amount. Common practice ranges from two to four weeks of pay per year of service, but senior packages vary widely based on role, equity, and legal risk. The stronger your potential claims, the more the release is worth, and the offer should reflect that.

How long do I have to review a severance agreement in California?

Every employee is entitled to at least 5 business days to review a severance agreement. And must be notified of the right to consult an attorney. California’s Silenced No More Act. If you’re 40 or older and releasing age discrimination claims, federal law extends this to 21 days (45 in a group termination). Plus a 7-day revocation period after signing. Outside those minimums, additional time is negotiable, ask for it in writing; the request is routine.

Can I negotiate a severance agreement?

Yes, and senior professionals usually should. Payment amount, equity treatment, references, non-disparagement language, and departure announcements are all negotiable in some cases. Negotiation is most effective before signing and before any deadline pressure narrows your options.

Is a non-compete clause in my severance agreement enforceable?

Almost certainly not. Non-compete clauses have been void in California since long before AB 1076 and SB 699 took effect in 2024. Those laws added notice requirements and penalties, they didn’t create the underlying prohibition. If your severance agreement includes one, flag it for review rather than assuming it’s a formality.

Can I still bring a PAGA claim after signing a severance agreement?

Generally, a pre-dispute severance release cannot waive your right to bring a PAGA representative claim on behalf of other employees. Though individual PAGA claims may be treated differently. Depending on how the agreement is drafted and where the underlying dispute stood at signing. This is a genuinely technical area post-Viking River and Adolph, if your termination involves wage and hour issues affecting coworkers too, it’s worth a direct conversation before you sign.

Book a Consultation

Our severance negotiation attorneys work alongside our broader employment law practice, including wage and hour claims that survive any release, to make sure nothing in your agreement goes unreviewed. We serve senior professionals throughout Oakland, Sacramento, and Northern California.

Contact us to schedule a severance agreement review, or call 855-TONG-LAW.

This post is for informational purposes only and does not constitute legal advice. Laws change; confirm the current rule as applied to your situation with a licensed California attorney.