Dismissal Contract

FAQs on Severance Agreements: Should I sign it?

Severance agreements are legally binding contracts. Consult an attorney to protect your rights.

Learning that you are being laid off or fired from your job is stressful, to say the least. In many cases, your employer will offer you a severance package and ask you to sign a severance agreement. Before you sign any severance agreement, you should know your rights and protect yourself financially and professionally. You should also consult an attorney to ensure your severance agreement is accurate and fair.

Here are some FAQs about severance:

Q: What is a severance package?

A: A severance package refers to a payment or other benefits an employer offers an employee upon termination of employment. Generally, an employer is not required by law to offer a severance package to every employee unless there was a previous agreement included in the terms of employment. Nevertheless, many employers voluntarily offer a severance package in order to limit liability and as a way of assisting employees. Employees who are terminated for poor performance or terminated for cause are generally not entitled to severance.

Q: What is a severance agreement?

A: First and foremost, a severance agreement is a legally binding contract between you and your employer that indicates you have agreed to accept a severance package as a result of the termination of your employment. You should realize that you are agreeing to the terms of the agreement, and the agreement will be enforceable. Signing a severance agreement will usually mean that the employee agrees to give up (or waive) certain rights in exchange for the payment specified in the agreement. The most important right that an employee waives by signing a severance agreement is the right to sue the employer for any reason, such as harassment, discrimination, retaliation, wrongful termination, or violations of the California Labor Code. In other words, your employer is offering to give you a payment in exchange for a promise that you will not sue them for terminating your employment. Also, depending on the severance agreement, you may be giving up other rights as well such as a confidentiality clause that prohibits you from speaking about the termination. Because you are waiving important rights, you should always consult with an attorney before signing a severance agreement.

Q: Are severance agreements enforceable?

A: Yes. Since the severance agreement is a contract, it is legally binding and courts will generally enforce the terms of the contract. That means, for the most part, you are bound by the terms of the severance agreement. Of course, there are some employment rights that are not waiveable under a severance agreement, and even if they are included will not be enforceable. These include rights that are strictly protected under California and/or federal law such as a dispute over unpaid wages or overtime pay you may be entitled to. However, for the most part, a severance agreement is enforceable absent certain theories of contract law such as duress, fraud or unconscionability.

Q: Do I have to sign a severance agreement to receive a severance package?

A: Yes. By design, you will not receive your severance package unless you sign a severance agreement. That’s why it is important to consult an attorney so you fully understand the terms of the agreement. But before you sign a severance agreement, you are free to negotiate the terms of the severance package. Remember, a severance package is merely an offer that you are free to accept, reject or negotiate. Of course, if you do not agree to a severance package, you will not receive any severance payment or benefits.

Once you are told that your employment is being terminated, you should consult the employee handbook to see what rights and benefits you have as an employee as well as any pre-employment terms and agreements to ensure the severance package fairly reflects any prior agreements. Also, there are also certain benefits that are protected by law that you are entitled to after termination such as COBRA for health care, and ERISA for retirement benefits.

Q: Do I need an attorney?

A: Yes. In all legal matters, it is best to consult with an attorney, particularly in a stressful situation like losing your job. Even if you are caught off guard, don’t rush to accept a severance package or sign a severance agreement. You have certain rights as an employee that are protected by law, and you need an experienced labor attorney to ensure your rights are protected.

Labor law is quite complicated, and losing your job is stressful. You should consider consulting an attorney to advise you about relevant local, state and federal labor laws that are enacted to protect employees. Also, an attorney should review the severance agreement to ensure the terms are accurate and lawful. More importantly, an attorney can advocate for you during this difficult situation.

FREE CONSULTATION

Srourian Law Firm, with locations in Los Angeles, Westwood, Woodland Hills, and Orange County is experienced in all aspects of employment law including severance agreements and have aggressively represented employees in Los Angeles, Hollywood, Santa Monica, Orange, Irvine, Anaheim, Santa Ana, Newport Beach, Costa Mesa, Fullerton, Tustin, Mission Viejo, San Clemente, Garden Grove, Laguna Niguel, Brea, Fountain Valley, Aliso Viejo, Yorba Linda, Westminster, Laguna Hills, Cypress, and La Habra.

If you or someone you know suffered employment violations as an employee or need advice regarding a severance agreement, you should be aware of the employee rights and protections under state and federal law to ensure the severance package is fair and accurate. Please contact us to speak with one of our lawyers for a free consultation.


Know The Law

Know the Law. Know your Rights.

Under California labor law, overtime wages must be paid when an eligible employee works overtime. Make sure your rights are protected when you work overtime. Here are some FAQs about overtime wages:

When am I entitled to overtime wages?

According to California labor law, a work day consists of eight hours of labor, and a workweek consists of no more than 40 hours a week. Any additional hours beyond eight hours per day or 40 hours per week are considered “overtime” and employees are entitled to overtime wages. Under the law, overtime wage must be at least one and one-half times the regular rate of pay. Moreover, any employee who works more than 12 hours in one day shall be entitled to overtime pay of no less than two times the regular rate of pay. There are additional overtime requirements for employees who work more than eight hours on their seventh consecutive workday,

Not every employee is entitled to overtime pay however. There are some narrow exemptions based on salary and job description, and in cases where a flexible work schedule is agreed upon. Also, some hours such as travel time, is not considered part of the workday.

How is overtime pay calculated?

Overtime pay is based on the employee’s regular hourly rate of pay. If the employee earns a salary, then the hourly rate is calculated by dividing the annual salary by 52 weeks, and the weekly pay is further divided by 40 hours. If an employee receives different rates of pay, then overtime is calculated by a weighted average of the rate.

What happens if I don’t get overtime pay?

An employer who fails to pay the lawful overtime wage to an eligible employee has broken the law. In that case, an employee has the right to sue under California law. According to California labor code section 1194, the employee may be able to recover the unpaid balance plus interest, as well as attorney’s fees and costs.

California labor law also requires overtime pay to be included in the next schedule paycheck. This is required by law regardless of any administrative delays such as having a supervisor approve the overtime.

Can I decline overtime pay?

Under California labor law, an employee cannot decline overtime pay if they are eligible. In other words, an employee cannot tell an employer that they will work overtime at the regular hourly rate. The reason for this is because California labor laws are designed to protect employees and are among the most strict and specific in the country. Allowing employees to waive their state rights to overtime pay is not good public policy and may be harmful to employees overall.

Also, employees cannot hide the fact that they are starting “overtime” hours from employers. This means that an employee cannot prevent employers from knowing they are about to accrue overtime hours, and therefore allow the employer the opportunity to prevent the employee from working overtime hours.

FREE CONSULTATION

Srourian Law Firm, with locations in Los Angeles, Westwood, Woodland Hills, and Orange County is experienced in all aspects of employment law including overtime wages and have aggressively represented employees in Los Angeles, Hollywood, Santa Monica, Orange, Irvine, Anaheim, Santa Ana, Newport Beach, Costa Mesa, Fullerton, Tustin, Mission Viejo, San Clemente, Garden Grove, Laguna Niguel, Brea, Fountain Valley, Aliso Viejo, Yorba Linda, Westminster, Laguna Hills, Cypress, and La Habra.

If you or someone you know suffered employment violations as an employee such as not receiving overtime pay in California, you may have certain employee rights under state and federal law and may be entitled to unpaid wages, interest, attorneys’ fees and costs, and/or be entitled to compensation as a part of the class action lawsuit. Please contact us to speak with one of our experienced lawyers for a free consultation.