California Severance Agreement After a Layoff: What to Review Before Signing

Review the primary official source.

Updated September 20, 2026. Verify the current agency form, notice, and instructions before acting.

A severance agreement is a contract, not merely a final paycheck receipt. The employer may offer money or benefits beyond existing obligations in exchange for a release of claims, confidentiality promises, cooperation, return of property, or other duties. Before signing, separate amounts already earned from new consideration, identify every right the agreement asks the employee to waive, and calendar the agreement-specific review and revocation terms. Rules for age-discrimination waivers add protections, but those rules do not make every severance offer identical.

Separate earned compensation from the severance offer

Build a payment table for regular wages, overtime, commissions, bonuses, accrued vacation, reimbursable expenses, benefits, and the additional severance amount. California final-pay obligations do not become optional because an employer offers a release. Note the stated payment date, payroll deductions, tax reporting, benefit end date, and whether the agreement conditions payment on signing, expiration of a revocation period, return of property, or some other event.

Check the agreement against the final wage statement, commission plan, incentive documents, equity award terms, paid-time-off policy, and benefit notices. If the employer disputes an amount, preserve the calculation and the source record. Do not treat a lump-sum label as proof that the offer includes everything the employee may already be owed.

Identify the claims and future conduct covered by the release

Read the definition of released parties, released claims, effective date, and unknown-claims language. A broad release may name federal, state, local, contract, tort, wage, discrimination, retaliation, and other theories. Determine whether the agreement addresses workers’ compensation, unemployment, vested benefits, indemnity, tax, or pending agency matters and whether any subject is expressly excluded.

Then review continuing obligations: confidentiality, non-disparagement, cooperation, return or deletion of information, nonsolicitation, invention, arbitration, venue, liquidated damages, fee shifting, and representations that no claim or workplace injury exists. California restricts certain contract terms, and federal agencies protect some communications. The actual language and circumstances require individual review; a checklist cannot declare a clause enforceable or void.

Apply the special federal rules for age-claim waivers carefully

When an employee age 40 or older is asked to waive a federal Age Discrimination in Employment Act claim, the Older Workers Benefit Protection Act imposes requirements for a knowing and voluntary waiver. EEOC guidance explains that the agreement must be understandable, specifically refer to ADEA rights, provide additional consideration, advise consultation with an attorney, and not waive future claims. The minimum consideration period is generally 21 days for an individual offer and 45 days for a group termination program, with a seven-day revocation period after signing.

Group programs can also require written disclosure of the decisional unit, eligibility factors, time limits, and job titles and ages of selected and nonselected employees. Do not apply the 21-day or 45-day number mechanically to every agreement. Confirm the employee’s age, whether the offer is part of a termination program, what claims are being waived, and the exact document provided.

Preserve the layoff and selection record before access disappears

Save the agreement, cover email, plan documents, organizational announcements, performance reviews, discipline, compensation records, job descriptions, leave or accommodation communications, complaints, investigation notices, and the employee’s own lawful work product. Record who was selected, what reason was stated, when the decision was communicated, and whether the position or duties continued. Do not take trade secrets, privileged files, or records the employee has no right to possess.

A personnel or payroll request can help fill gaps; our California records-request guide explains that separate process. Preserve evidence before an account closes, but continue to track external deadlines. Negotiations over severance generally do not stop a CRD, EEOC, Labor Commissioner, arbitration, or court filing period.

Compare the offer with realistic alternatives and obligations

Evaluate the net payment, benefit continuation, unemployment implications, tax treatment, reference language, nonmonetary terms, claim strength, likely process, and cost of performance. Ask which terms are negotiable and confirm changes in the final written document. Never rely on an oral promise that conflicts with an integration clause.

For deadline and forum context, use the California employment claims FAQ and the final-pay guide. For help evaluating a dispute, review the firm’s California employment litigation practice. A review should end with a dated list of questions, proposed edits, missing records, and the latest safe decision time under the actual agreement.

What this means: practical action checklist

• Create separate lines for earned wages, accrued vacation, expenses, benefits, and new severance consideration.
• Mark every released claim, covered person or entity, and continuing obligation in the agreement.
• If age 40 or older, determine whether the ADEA and OWBPA individual-offer or group-program rules apply.
• Preserve lawful records and the stated selection reason before employer-system access ends.
• Calendar the agreement’s review and revocation periods and all external claim deadlines independently.