A severance agreement pays you money or benefits after you leave a job, in exchange for giving up your right to sue your employer. Before you sign, it helps to know what you are trading away. We spot terms California law does not allow, value the claims you would release, and negotiate better terms.
We advise executives and employees at every level, and we help employers draft agreements that hold up. Our California employment lawyers work from our San Mateo office. For a free consultation, call 650-250-0705.
How Long Do I Have to Review a Severance Agreement in California?
It depends on the agreement. Under California’s Silenced No More Act, an employer offering a separation agreement that restricts your ability to discuss workplace conditions must tell you that you have a right to consult an attorney and give you a reasonable time period of not less than five business days. Separately, if you are 40 or older and the agreement waives age discrimination claims, the federal Older Workers Benefit Protection Act requires at least 21 days to consider it — 45 days if it is part of a group termination program — plus seven days after signing to revoke.
Key Takeaways
- A severance agreement is a contract: you usually get pay or benefits in exchange for a general release of your legal claims.
- SB 331 bars terms that stop you from disclosing unlawful workplace acts, and requires at least five business days to consider a separation agreement.
- If you are 40 or older, OWBPA gives at least 21 days to consider a waiver, 45 in a group program, and 7 days to revoke.
- Since January 1, 2024, it is unlawful to include a non-compete clause in a California employment contract that does not satisfy a statutory exception.
- Almost everything is negotiable — the amount, benefits, references, timing, and equity.
What a Severance Agreement Really Is
A severance agreement is a contract, not a gift. You receive something of value, usually severance pay or continued benefits, and in return you give a general release. That release is the heart of the deal.
Here is why the release matters so much. The severance offer is only a good deal if it is worth more than the claims you are giving up. If your departure was routine, the release may be worth far more than the money on the table. If your departure may involve an illegal reason, the claims you would release could be worth far more than the money on the table.
So the first question is not how many weeks of pay are offered. It is what you would be signing away, and what that is worth.
What You Give Up: The General Release
A general release usually means you agree not to sue your employer for claims that arose up to the date you sign. That can be a broad waiver covering many types of claims at once. Some rights cannot be waived, but the waiver is often wide.
Before signing, it is worth valuing the claims in play. Those may include wrongful termination, discrimination or harassment, retaliation, and unpaid wages. If any of those look strong, the release changes the math. A lawyer can help you weigh the offer against the claims you would release.
SB 331: The Silenced No More Act
California’s SB 331, the Silenced No More Act, took effect on January 1, 2022, amending Government Code section 12964.5. It limits what an employer can put in a separation agreement.
An employer generally may not require non-disparagement or confidentiality terms that stop you from disclosing unlawful workplace acts, such as harassment or discrimination. If an agreement includes provisions restricting your ability to disclose information about workplace conditions, it must contain the statutory carve-out language, which the statute sets out in substantial form as: “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.”
The law also gives you time and information. Where an employer offers a separation agreement containing such provisions, it must notify you of your right to consult an attorney and provide a reasonable time period of not less than five business days to do so. You can sign sooner if you choose, provided the decision is knowing and voluntary.
Even so, an agreement can still include a general release, protect genuine trade secrets and confidential business information, and keep the severance amount confidential. And the restrictions do not apply to a negotiated settlement agreement resolving a claim already filed in court, before an agency, in an alternative dispute resolution forum, or through an employer’s internal complaint process.
Extra Protections if You Are 40 or Older
If you are 40 or older, a federal law called the Older Workers Benefit Protection Act adds rules for waiving age discrimination claims. These rules exist to make sure the waiver is knowing and voluntary. Among the requirements:
- The waiver must specifically refer to rights or claims arising under the ADEA.
- You must receive something of value beyond what you are already entitled to.
- You must be advised in writing to consult an attorney before signing.
- You must be given at least 21 days to consider the agreement, or at least 45 days if the waiver is offered in connection with an exit incentive or other employment termination program offered to a group or class of employees.
- You get at least seven days after signing to revoke, and the agreement does not become effective or enforceable until the revocation period expires.
In a group termination, the employer must also provide written information about the class or group covered, the eligibility factors, any applicable time limits, and the job titles and ages of those selected and not selected in the same job classification or organizational unit.
A practical point that catches people out: a material change to the offer generally restarts the 21 or 45 day clock unless the parties agreed in advance that changes would not restart it. If an employer skips these steps, the waiver of age claims may not hold up. The practical lesson is simple: use the time you are given rather than rushing to sign.
What to Review and Negotiate
Most severance terms are negotiable, and the offer is a starting point. Here are the terms worth a close look.
| Term | What to check |
| Severance amount | How many weeks or months of pay, and whether it reflects the strength of the claims you would be releasing |
| Benefits | Whether health coverage continues and who pays; COBRA lets you keep group coverage for a time, usually at your own cost |
| References | A neutral reference and an agreed description of how your departure is announced |
| Restrictive terms | The scope of any non-solicitation, confidentiality, and non-disparagement language |
| Timing | Your last day and when payments actually arrive |
| Tax structure | Severance is generally taxable; how payments are characterised and reported can change the result |
One point on restrictive terms. California strongly limits non-compete agreements against employees. Business and Professions Code section 16600 provides that, except as provided in that chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void. Two provisions added effective January 1, 2024 go further: section 16600.1 makes it unlawful to include a non-compete clause in an employment contract, or to require an employee to enter one, that does not satisfy an exception in that chapter; and section 16600.5 provides that a contract void under the chapter is unenforceable regardless of where and when it was signed.
Non-solicitation and confidentiality terms raise separate questions and should be read closely on their own terms rather than assumed to fall with a non-compete.
Executive Severance: Equity, Bonuses, and Change of Control
Senior and executive packages carry more moving parts. The details depend on your plan and grant documents, and many terms are negotiable.
- Equity: what happens to vested and unvested stock options or RSUs at separation, how long you have to exercise, and whether any vesting can accelerate.
- Bonuses: earned but unpaid bonuses, and whether a prorated bonus for the year is on the table.
- Change of control: whether the package provides enhanced severance if you leave around a sale or merger, sometimes tied to a double trigger.
- Other terms: continued vesting, a short consulting or transition period, and indemnification or coverage for actions taken while you served.
Because these terms vary widely, it is worth reviewing the actual plan and grant documents rather than relying on a summary offer letter.
For Employers: Drafting Agreements That Hold Up
A severance agreement only protects the company if it is enforceable. That takes care in the drafting, not a recycled template.
Where an agreement includes confidentiality or non-disparagement language, it needs the SB 331 carve-out and the required notice and time period. The release must be supported by real consideration. Where employees 40 or older are involved, the OWBPA consideration and revocation periods, and the group disclosure requirements in a group termination, are worth avoiding shortcuts on. And any restrictive covenant needs to be checked against the current section 16600 framework, which since January 1, 2024 makes inclusion itself unlawful where no exception applies.
Severance Agreements in San Mateo and on the Peninsula
Our office at 15 North Ellsworth Avenue, Suite 105, San Mateo, CA 94401 works with employees, executives, and employers across the Peninsula. Two local realities shape this work.
Equity is often the largest component of a Peninsula severance package, and its treatment sits in plan and grant documents rather than in the severance agreement itself — which means the offer letter alone rarely tells you what is actually on the table. And group reductions are common enough here that the OWBPA 45-day period and the group disclosure requirements come up regularly rather than occasionally.
Details about the office are on our San Mateo page.
How We Help
We work both sides of severance. For employees and executives, we review the full agreement, explain what you are releasing, value the claims in play, flag terms California law does not allow, and negotiate the amount, benefits, references, and equity. Much of this is flat-fee or hourly advisory work, and where there is an underlying claim, contingency options may apply.
For employers, we draft compliant, enforceable severance and separation agreements, build in the required carve-outs and consideration periods, and handle group layoffs under the OWBPA, usually on an hourly basis.
The firm’s employment practice sits alongside our California business law work. If a severance agreement is on your desk, or you need one drafted the right way, call 650-250-0705 or schedule a consultation before anyone signs.
This page provides general information about California and federal law and is not legal advice; reading it or contacting the firm does not create an attorney-client relationship. Employment statutes are amended from time to time and should be confirmed against current text. Every situation is different, and prior results do not guarantee a similar outcome.
Reviewed by Alan D. Khalfin, Partner and Managing Attorney, Vaksman Khalfin, PC (admitted in California). Last reviewed: 08/25/2026
Severance Agreement Frequently Asked Questions
There is rarely a reason to. Where the agreement restricts your ability to discuss workplace conditions, California requires the employer to give you a reasonable period of not less than five business days and to tell you that you may consult an attorney. If you are 40 or older and waiving age claims, federal law requires at least 21 days, or 45 in a group program. Using that time costs you nothing.
Usually a general release of claims that arose up to the date you sign — potentially including wrongful termination, discrimination, harassment, retaliation, and wage claims. The offer is only a good deal if it is worth more than what you are releasing, which is why valuing the claims first matters.
No. Under California's Silenced No More Act, effective January 1, 2022, an employer generally may not require non-disparagement or confidentiality terms that prevent you from disclosing unlawful acts in the workplace. Where an agreement restricts disclosure of workplace conditions, it must include the statutory carve-out language preserving your right to discuss conduct you have reason to believe is unlawful.
There is no set formula, and no lawyer can promise a figure. What is achievable depends on the strength of the claims you would be releasing, your role and tenure, the circumstances of the departure, and what the employer's own policy or precedent looks like. The amount is one of several negotiable terms, alongside benefits, references, timing, and equity.
The federal Older Workers Benefit Protection Act requires that a waiver of age claims specifically refer to the ADEA, be supported by consideration beyond what you are already owed, advise you in writing to consult an attorney, give you at least 21 days to consider it — 45 days in a group termination program — and give you seven days after signing to revoke, during which the agreement is not effective.
California voids most non-competes against employees under Business and Professions Code section 16600. Since January 1, 2024, section 16600.1 makes it unlawful to include a non-compete clause that does not satisfy a statutory exception, and section 16600.5 provides that a contract void under the chapter is unenforceable regardless of where and when it was signed. Non-solicitation and confidentiality terms raise separate questions and should be read on their own terms.
Severance is generally taxable, and how payments are characterised and reported can affect the result. Tax treatment is worth confirming with a tax professional alongside legal review before you sign.
That depends on your plan and grant documents rather than on the severance agreement alone — including what happens to vested and unvested awards at separation, how long you have to exercise, and whether any acceleration applies. For senior packages this is often the largest single item, and it is worth reviewing the actual documents.
Yes. We draft compliant, enforceable severance and separation agreements, build in the SB 331 carve-out and the required consideration and revocation periods, and handle group layoffs under the OWBPA.
Much of this work is flat-fee or hourly advisory work, and where there is an underlying claim, contingency options may apply. We discuss fees before any work begins, and the first consultation is free.
