Severance And Settlement Agreements


We have negotiated hundreds of severance and settlement agreements on behalf of employees and employers. Employees feel frightened, pressured by deadlines and unsure of their rights. Employers are unsure of their options, legal obligations (if any) and long-term legal implications of providing severance to terminating employees.

Severance or Settlement Agreements for Employees

While the terms of a Severance or Settlement contain similar terms, a severance agreement is usually offered by an employer to an employee who is being terminated or laid off. In comparison, a settlement agreement is usually negotiated between the employee and the employer after the employee has raised legal claims relating to a termination.

You can and should always negotiate the terms of a Severance or Settlement Agreement. Some terms you should consider and which we can negotiate for you include:

  • Additional compensation or severance as well as payment of a pro rata share of your bonus;
  • Payment of all commissions;
  • Payment of wages and PTO/vacation through effective date of termination;
  • Mutual Release of Claims in which the employer releases you from any and all claims;
  • Mutual Non-Disparagement Clause;
  • Agreed Statement About Departure;
  • Change termination to resignation, but make sure employer will not contest an application for unemployment benefits;
  • Continuation of health insurance benefits for some period of time before COBRA or Cal-COBRA kicks in;
  • Make sure there is not a no-rehire clause that violates California law;
  • Structure severance/settlement for tax purposes;
  • Continuing indemnification if you are a C-level officer;
  • Make sure you are not waiving claims that are not waivable under California law;
  • Try to negotiate away liquidated damage clause for breach;
  • If there is a confidentiality clause, make sure it is also binding on the employer;
  • Reimbursement of attorney’s fees;
  • No restrictive covenants binding on you in the future;

No restriction on disclosing factual information relating to claims of sexual assault, sexual harassment, discrimination based on sex or retaliation for reporting such unlawful acts based on FEHA, and to the extent such disclosures are protected by law. No liability for such protected conduct.

Severance or Settlement Agreements for Employers

  • Full Release of Claims by Employee and be sure all Employer entities are released
  • Release of all known and unknown claims under Civil Code section 1542
  • Statement of terms of payment and benefits and how income will be reported
  • Non-Disparagement Clause
  • Confidentiality Clause
  • Reinforcement of any previously signed Confidentiality Agreement or Proprietary Information Agreement
  • Protection of Confidential, Proprietary and Trade Secret Information
  • No Cooperation Clause which is an agreement not to aid third parties in suing the employer in the future; agreement not to tortiously interfere with the business of the employer
  • Tax Indemnification
  • Transition Assistance
  • Statement that all wages, benefits, expenses, etc. have been paid and employee waives the provisions of Cal. Labor Code section 206.5
  • Consequences of Breach
  • Attorney’s fees to prevailing party in any subsequent litigation
  • Attorney’s fees to prevailing party in any subsequent litigation