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. When an employee age 40 or older waives age claims, 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 provides that a general release does not extend to unknown claims, so a release meant to reach them should address them expressly. And Cal. Code Civ. Proc. §1001 (effective 2019, expanded since) bars settlement provisions that prevent or restrict disclosure of factual information about a filed claim or complaint alleging workplace harassment, discrimination, or retaliation (and certain other claims), although the amount paid in settlement may stay confidential.

Common Severance Drafting Issues

Common drafting issues that create exposure or unenforceability include OWBPA non-compliance in a waiver of age claims by an employee age 40 or older; overbroad non-disparagement or confidentiality clauses that conflict with Cal. Code Civ. Proc. §1001 (which bars restricting disclosure of factual information about filed harassment, discrimination, or retaliation claims) or with the National Labor Relations Act protections for concerted activity; PAGA language that does not account for Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, which held that an employee compelled to arbitrate individual PAGA claims keeps standing to litigate non-individual PAGA claims in court; final-pay timing failures that create separate liability under Cal. Lab. Code §§201-203; and any requirement that the employee release a claim for wages due before those wages are paid, which Cal. Lab. Code §206.5 makes void. 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, 206.5; 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 provides that a general release does not extend to claims the releasing party does not know or suspect to exist at the time of signing, so a release meant to reach unknown claims should address them expressly. Without express language, a court may read the release narrowly, leaving unknown claims outside its scope.

Only after careful review. What Adolph decides is narrow: in Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, the California Supreme Court held that where a plaintiff has brought a PAGA action with individual and non-individual claims, an order compelling arbitration of the individual claims does not strip the plaintiff of standing to litigate the non-individual claims on behalf of other employees. The decision concerns arbitration, not severance releases, and it does not decide what a private release can do about PAGA claims. A severance agreement that touches PAGA claims should be reviewed with counsel before it is offered.

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 §§201-206.5 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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