California Severance & Separation Agreement Review Lawyer

More Than the Number: Terms Worth Negotiating

It’s natural to focus on one figure in a severance offer — the total dollar amount. But a severance agreement is a contract, and many of its terms are negotiable. How the agreement is written can change not only how much you receive, but how and when you actually receive it.

Payment structure and timing. Severance is often paid as a single lump sum. Lump-sum payments are commonly treated as supplemental wages, which frequently means more is withheld up front than people expect. Whether a severance is paid all at once or spread over time — and when it is paid — are terms of the agreement, and payment structure and timing are often negotiable. Thinking through how a payment is structured can make a real difference in what reaches you, and when.

This is general information about negotiating agreement terms — not tax or accounting advice. Consult a tax professional about your own situation.

Payment structure is just one example. Other terms frequently worth negotiating include neutral reference language (what a future employer will be told), mutual non-disparagement (so the obligations run both ways, not only against you), and the scope of the claims you’re being asked to release. (The “Negotiation Issues” section above lists more.)

How Much Time You Have to Decide

How long you have to review a severance agreement depends on the situation. Under the federal Older Workers Benefit Protection Act (OWBPA), if you are 40 or older and the agreement asks you to waive age-discrimination claims:

• Individual separations. You must be given at least 21 days to consider the agreement, and 7 days after signing to revoke it.
• Group terminations or exit-incentive programs. If the agreement is offered in connection with a group termination or exit-incentive program (for example, a layoff affecting a class or group of employees), you must be given at least 45 days to consider it, along with written information about the group — the eligibility factors, the time limits, and the job titles and ages of those selected and not selected — plus the same 7-day revocation period after signing.

Employees under 40 get whatever time the employer provides, though California employers must still allow reasonable time. Whichever applies to you, do not let an employer pressure you into signing before you understand what you’re giving up. If your deadline is short, a quick call is usually enough to tell you whether you have more time than you think.

A Note on Timing

With a severance agreement, the deadline that matters most is usually the one written into the agreement itself — the offer typically comes with a response or signing deadline. For employees 40 or older, the federal OWBPA review windows described above also apply. Acting promptly gives you time to have the agreement reviewed, and negotiated if appropriate, before that deadline passes. If you’re deciding whether to sign at all, any underlying claims can carry their own separate deadlines, which ShortLegal can flag when reviewing your situation.