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Severance pay is compensation that employers provide to employee upon termination of their employment. Under California law, businesses are generally not required to offer severance pay to a terminated employee. Similarly, the U.S. Department of Labor does not generally require that employers offer severance pay to employees. However, that does not mean there are no circumstances in which a person in California will receive severance pay. If there is an existing contract that outlines a severance pay agreement between an employer and an employee, this creates a legal obligation to satisfy the payment terms.
Severance pay, commonly referred to as a severance package, is compensation that an employer will pay to the worker after the worker is terminated, or is about to be terminated, from their job. Severance pay is typically made through monetary means, though it could include extended benefits such as retirement account payments, stock options, health insurance benefits, help finding a new job, or assistance in training for a new vocation.
In California, severance pay also includes paying out any unused paid time off (PTO), sick leave, or vacation pay.
In many cases, a severance payment will be made only upon the employee agreeing not to pursue any future legal action against the employer. Severance agreements will often include the following:
If you are being offered a severance agreement by your employer, it is strongly advised that you seek assistance from an Orange County workers’ compensation lawyer as soon as possible. An attorney can review the terms of a severance agreement to ensure that you are being treated fairly by your soon to be former employer. While severance agreements are not required in California, any severance agreement that is offered or made is considered a legal agreement between two parties. Therefore, you should have a legal expert review the terms of the agreement.