Bartz Law Group

Employee Rights Advocates

What Is A Separation Agreement In California Employment Law?

A separation agreement when getting employed in California is pivotal and has significant implications for both employers and employees. Below, you learn about separation agreements in California, exploring their nature, requirements, and the rights it involves, with the help of employment lawyers.

Is an Employee Separation Agreement a Binding Contract?

An employee separation agreement is a legally binding contract in California. The agreement is formed between an employer and an employee on the verge of termination, with the employer offering a severance package. For the employee to receive this package, they must relinquish certain rights against the employer​​.

Contract Requirements

For a separation agreement to be legally binding in California, there are key elements that must be present:

  • An offer;
  • Acceptance of that offer; and
  • Consideration

These are agreed-upon exchanges of value by each party. The employer offers monetary or other benefits, while the employee gives up their legal rights to sue the company. However, the contract’s purpose must be lawful, as any agreement breaking the law would be void​​.

Voidness of Separation Agreements

A separation agreement in California may become void if it requires an employee to give up legally non-waivable rights. In such cases, while the unlawful provision is void and unenforceable, the rest of the agreement might still stand due to the inclusion of severability provisions​​.

Commonality of Separation Agreements

Not every termination in California involves a separation agreement. They are more common in situations like layoffs or downsizing, often offered to maintain the employer’s reputation, even when there is no concern about potential lawsuits​​.

What Rights Does It Require California Workers To Relinquish?

In California, when workers enter into a separation agreement, they are often required to relinquish various legal rights as part of the deal. The specific rights that a worker might waive include:

Waiver of Claims

Workers, in signing separation agreements, often waive rights to file claims related to wrongful termination, discrimination, class action lawsuits, and other potential claims unknown at the time of signing. The waiver details are specified in the severance agreement, and once waived, these rights cannot be invoked later​​.

Rights that Cannot be Waived in a Separation Agreement

Certain rights cannot be waived in a separation agreement under California law. These non-waivable rights ensure that certain fundamental protections remain intact for employees, even in the context of a separation agreement. These rights include:

Age Discrimination Claims

Waiving rights to file age discrimination claims under the Age Discrimination in Employment Act (ADEA) requires compliance with the Older Workers Benefit Protection Act (OWBPA). This includes clear, unambiguous language in the waiver, advisement to consult employment lawyers in California, and specified periods for consideration and revocation of the waiver​​.

Severability Provisions

If a separation agreement includes a non-waivable right, that portion is not enforceable by California courts. Most agreements have a severability provision, ensuring the rest of the agreement remains enforceable if a part is found unenforceable​​.

Common Post-Termination Restrictions on Departing Workers in California

These restrictions, also known as restrictive covenants, are designed to protect the employer’s interests after an employee leaves the company. Some of the most common post-termination restrictions include:

  • Non-Disclosure Agreements (NDAs). NDAs restrict former employees from sharing confidential information.
  • Confidentiality Clauses. These clauses prevent the disclosure of certain information about the employer or the company’s operations, strategies, and more.
  • Non-Disparagement Clauses. These clauses restrict former employees from making damaging statements about the employer or the company.
  • Non-Solicitation Agreements. These agreements aim to prevent former employees from soliciting the employer’s clients, customers, and other employees.

Non-Compete Clauses

California employment law generally deems non-compete agreements unenforceable. However, they are still frequently included in contracts as employers attempt to exert control over former employees​​.

Knowing what you could do or not do after switching jobs under separation agreements in California binds the employers and employees. For further guidance, consulting with employment lawyers in California is advisable, especially given the potential complexities and legal implications involved in these agreements.