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Waiving your rights? The pros and cons of severance agreements

On Behalf of | Nov 28, 2023 | Employment Law

When parting ways with your job in California, it’s common for your employer to provide a severance agreement, which might include a general release or waiver of claims. This document is usually part of a severance package, and in signing it, your employer might ask you to forfeit your right to sue them for any possible reason. In exchange, you could receive a severance payment or other benefits.

Despite the potential benefits, signing such a waiver may not always be to your advantage. Here are some reasons you should carefully consider before signing such an agreement.

Potential loss of legal rights

Signing a general release may mean giving up your right to sue for employment issues like wrongful termination or discrimination. You could be waiving valuable claims under California’s strong worker protections. However, some rights, such as filing an unpaid wage complaint with the California Division of Labor Standards Enforcement (DLSE), cannot be waived.

Inadequate compensation

The severance package offered in return for your signature might not sufficiently compensate for the rights you are surrendering. The severance package may be less than what you could have earned had you remained employed or less than what other employees received in similar circumstances. In other words, the severance package your company is giving you might not be worth the rights they are asking you to give up.

Lack of understanding

Legal documents can be complex. You might not fully grasp the claims or rights you are waiving or the terms and conditions of the agreement. California law requires that employers write waivers in a manner that can be understood by those who sign them. However, it can still be challenging to understand all the implications of the document without legal advice.

Take a moment to reconsider

Ultimately, severance agreements can seriously affect your rights and future employment. It’s crucial to fully understand what you agree to and whether the compensation is truly worth it before signing any document affecting your rights as an employee. Not all severance agreements require you to give up potential claims against your employer, but it is not uncommon. If you encounter this situation, you can contact Licata & Yeremenko for guidance.