Legal Question in Employment Law in California

Re: Severance Pay Compensation

No employer is legally obligated to pay severance to anyone. When they do, it is common to require the employee to sign away rights to future claims of any kind.

Re: Severance Pay Compensation

There is no law that requires severance to be paid at all, so the company is free to determine how much it wants to pay at any given time. Some things to be aware of however, are: the WARN Act, which is a federal law that requires certain employers laying off a large number of people, to give at least 60 days notice; setting a precedent, which may be argued by employees as being evidence of a contract to pay a fixed amount of severance; a claim of discrimination, if different severance plans may effect different classifications of employees who are protected by law.

A release of all claims is only effective if the severance agreement is drafted correctly. For example, to waive claims of age discrimination, the employee must be given at least 21 days to consider the package, and 7 days to change their mind even after signing it.

The bottom lime is that care must be given on how to implement a severance plan and how to draft a release agreement.