Severance and Settlement Agreements

Michael Trust founded Michael Trust Law, APC after more than 35 years in HR leadership across entertainment, healthcare, higher education, finance, banking, solar energy, and other industries, including managing approximately 35,000 disability and leave-of-absence cases. He holds the SPHR, PHRca, and SHRM-SCP credentials. The PHRca is a California-specific HR credential focused on California employment law and HR practice. According to HRCI’s published pass-rate statistics at https://www.hrci.org/pass-rates, the PHRca has the lowest pass rate of all HRCI credentials — 47% as of December 31, 2025, compared with 71–84% for HRCI’s other certifications — and only 293 candidates worldwide tested for it in 2025. That HR-systems background helps identify HR process issues early, which can shape legal analysis on both sides.

Employer Severance

Severance packages can be a powerful tool for employers to reduce risk and buy peace. Michael Trust Law, APC helps employers design severance agreements that are compliant, defensible, and strategically aligned with business goals.

Severance and Settlement Agreements

California Severance and Settlement Agreements — Employer Counsel

Severance and settlement agreements in California must comply with several layered statutory requirements. For employees age 40 or older, the federal Older Workers Benefit Protection Act (OWBPA), 29 U.S.C. §626(f), requires a 21-day consideration period (45 days for group terminations) and a 7-day post-execution revocation period, plus specific disclosure requirements. Cal. Civ. Code §1542 requires specific waiver language to release unknown claims. And Cal. Code Civ. Proc. §1001 (effective 2019, expanded since) limits the scope of harassment-related confidentiality and non-disparagement provisions.

Common Severance Drafting Issues

Common drafting issues that create exposure or unenforceability include OWBPA non-compliance for employees age 40 or older; overbroad non-disparagement or confidentiality clauses that conflict with Cal. Code Civ. Proc. §1001 (in the harassment context) or with the National Labor Relations Act protections for concerted activity; PAGA waiver language that is now substantially limited after Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104; and final-pay timing failures that create separate liability under Cal. Lab. Code §§201-203. Whether a particular severance package is fully enforceable depends on the workforce context, the employee’s age, the nature of the underlying claims, and the specific drafting — all fact-specific.

When to Contact Us

Severance agreements drafted from outdated templates are a common source of preventable exposure. Contact Michael Trust Law, APC.

Initial contact does not create an attorney-client relationship — see Disclaimers.

Older Workers Benefit Protection Act, 29 U.S.C. §626(f); Cal. Civ. Code §1542; Cal. Code Civ. Proc. §1001; Cal. Lab. Code §§201-203; Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104.

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Frequently Asked Questions

It can matter a great deal. Cal. Civ. Code §1542 requires specific waiver language before a release can cover claims the employee does not know about or suspect at the time of signing. Without that language, a court may read the release narrowly, leaving unknown claims outside its scope.

With real limits. Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104 held that an employee who signs an individual arbitration agreement does not lose standing to pursue non-individual PAGA claims in court, which substantially narrows what a PAGA waiver can actually accomplish. A waiver drafted before Adolph should be revisited.

Only where a federal age-discrimination waiver is involved. The Older Workers Benefit Protection Act (OWBPA), 29 U.S.C. §626(f), requires the 7-day revocation period, along with a 21-day (or 45-day, for group terminations) consideration period, specifically for employees age 40 or older who are waiving age claims. Agreements with younger employees are not subject to this particular federal requirement, though other considerations may still apply.

No. Cal. Lab. Code §§201-203 requires all wages already earned to be paid immediately upon an involuntary termination, regardless of whether the employee signs a severance agreement. Severance pay is separate consideration for the release and cannot be used to delay or condition wages the employee has already earned.

Michael Trust Law, APC drafts severance and settlement agreements, including release and non-disparagement provisions, tailored to the circumstances of each departure. Contact Michael Trust Law, APC to discuss your situation.

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