Severance pay and severance agreements are always a relevant topic no matter what part of the country a person might find themselves in. In this regard, California is a state where severance pay is not required under the acting law. But, for anyone who is in this type of a situation in California, there are still options that could result in severance pay given by a company to an employee. Here are the commonly asked questions about severance pay in California.
1. Being Entitled to any Form of Severance Pay
In those cases where an employee is there by their own will (so-called “at-will employee”) and if the working arrangements are to be stopped either because of the decision of the employer or the employee, there is no legal requirement for any form of a severance for the employee. This is the foundation of the law and it has to be kept in mind by all who are in this type of a situation.
2. If there is no Legal Requirement, why do some Employers offer it regardless?
In spite of the law that does not require it, there is a range of reasons why employers still provide it. Firstly, employers that have to scale down their business chose to cushion this troubling effect on their collective by providing the layoff employees with severance pays. Then, there are situations where the employer believes that the employee could take legal action against the business. To make sure this does not happen, severance pay could be handed out in exchange for an avoidance of any possible litigation. When a severance pay is accepted, the process acts as a de facto waiver of all potential claims the employees could have on the same business. This is a tried and tested way of avoiding time-consuming and costly litigations.
3. Do Employers need to Pay the Employee to attain the Release of all Claims
Generally, some form of severance pay has to be provided to the employee so that they release their claims. The same payment cannot be in the form that already has to be legally provided to the employee, including things like back pay, due performance bonuses or anything of that kind.
4. General Terms of the Severance Agreement
The severance agreements in California usually include civil code section 1542 that represents the waiver that releases all claims, both known and unknown. Aside from this, the agreement also includes confidentiality, exclusion of present or future employment, admission of liability, a return of all company property and a non-disparagement point that defines what job reference is provided to the employers.
5. What are the Special Considerations for Employees that are over 40 years old?
Those who are age 40 or older can be protected by OWBPA (Older Workers Benefit Protection Act). This Californian act offers the employees a chance to protect themselves against potential age discrimination. To make sure that the employees in this age group are provided the same protection, it is important that they consult legal counsel so that they do not lose their claim for a severance pay.
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