Negotiating Severance Packages in California: A Comprehensive Guide

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. I am not a lawyer. The content reflects insights based on my 15+ years of experience in human resources and is intended to help employees understand general principles related to severance packages in California. For legal advice, consult a qualified attorney.

Understanding Severance Packages

Facing a layoff or termination can be challenging. Knowing your rights and understanding the components of a severance package can help you negotiate a fair and beneficial agreement.  In this article, I will discuss some tips, as a Human Resources Consultant as well as a former employee who has negotiated her own severance. 

In California, employers are not legally required to offer severance pay. However, many provide it to reduce potential legal claims and support employees during their transition (Indeed, 2025).

A severance package can include:

• Financial compensation

• Health insurance continuation

• Unused vacation pay

• Outplacement services

💡 Tip: Always ask for a written breakdown of the package. This makes it easier to review and negotiate.

Key Components of a Severance Package

When reviewing a severance package, consider the following:

1. Severance Pay
Compensation provided after termination, typically based on company policy or negotiation.

2. Unused Paid Time Off (PTO)
California law requires that unused vacation time be paid out upon termination (California Department of Industrial Relations, 2025).

3. Health Insurance Benefits
Some employers continue coverage or assist with COBRA premiums.

4. Stock Options and Retirement Benefits
Clarify the status of any vested stock options and retirement plans.

5. Outplacement Services
Some employers provide job search assistance to help employees transition.

6. Non-Disclosure and Non-Disparagement Clauses
Carefully review clauses that could limit future employment opportunities or prevent you from speaking about your experience (California Civil Rights Department, 2022).

⚠️ Watch Out: Don’t sign anything containing clauses you don’t understand—these could impact your future job opportunities.

Best Practices for Negotiation

Review the Offer Thoroughly
Understand each term and its implications before signing.

Consult Legal Counsel
An employment attorney can help identify unfavorable terms.

Assess Your Needs
Consider financial stability, unemployment duration, and required benefits.

Leverage Your Contributions
Highlight your achievements and the value you brought to the organization.

Be Prepared to Walk Away
Decline offers that are not favorable or contain overly restrictive clauses.

💡 Tip: Negotiating isn’t just about money—consider benefits, references, and career transition support.

Common Mistakes to Avoid

• Signing Without Understanding – Make sure you fully comprehend all terms.

• Overlooking Legal Rights – Check that the agreement does not waive important legal protections. If you aren't clear, call an Attorney!

• Ignoring Tax Implications – Understand tax consequences of lump-sum payments.

• Accepting Restrictive Clauses – Non-compete or non-disclosure agreements may limit future employment.

⚠️ Watch Out: Never feel pressured to sign immediately. Take time to review and consult a professional.

California Laws to Consider

Final Pay Requirements
All wages, including accrued PTO, must be paid immediately upon termination (California Department of Industrial Relations, 2025).

WARN Act
Employers must provide 60 days’ notice before mass layoffs, plant closures, or relocations (California Employment Development Department, 2025).

Retaliation Protections
Employees are protected from retaliation for exercising rights, including negotiating severance terms (California Department of Industrial Relations, 2025).

💡 Tip: Keep records of all communications regarding your termination and severance offer.

Conclusion

Negotiating a severance package in California requires knowledge of your rights, the components of the package, and effective negotiation strategies. Being informed and prepared can help you secure a fair agreement that supports your transition.

For personalized guidance or more information, contact Jones Consulting Company CA. While I am not a lawyer, my 15+ years of HR experience provide insights to help you navigate this process safely.

References

California Civil Rights Department. (2022). Employment separation and settlement agreements: Limitations & FAQ. https://calcivilrights.ca.gov/wp-content/uploads/sites/32/2022/11/Employment-Separation-and-Settlement-Agreements-Limitations-FAQ_ENG.pdf

California Department of Industrial Relations. (2025). Final wages and vacation pay. https://www.dir.ca.gov/dlse/faq_vacation.htm

California Employment Development Department. (2025). Layoff services and WARN Act. https://edd.ca.gov/en/jobs_and_training/Layoff_Services_WARN

Indeed. (2025). Guide to severance pay. https://www.indeed.com/career-advice/pay-salary/guide-to-severance-pay