What If My Employer Doesn't Pay the Severance They Promised in Los Angeles?

You signed the agreement. You gave up your right to sue. You held up your end. And now the check isn't coming. Or it's less than what was promised. Or they're saying the terms have changed.

A severance agreement is a contract. If your employer doesn't pay what they agreed to pay, they've breached it. You have options.

A Severance Agreement Is a Binding Contract

Once both sides sign, a severance agreement is a legally enforceable contract under California law. Your employer cannot unilaterally change the terms, reduce the amount, or decide they don't feel like paying. The consideration was mutual: you gave up your legal claims, they agreed to pay you. Both sides are bound.

It doesn't matter if the company's financial situation has changed, if new management took over, or if they decided the severance was too generous after the fact. A deal is a deal.

Common Ways Employers Fail to Pay

They stop making payments. If your severance is structured as salary continuation (regular payments over time), some employers make the first few payments and then stop. Maybe they're having cash flow problems. Maybe they're testing whether you'll notice or push back.

They pay less than agreed. The agreement says $40,000 but the check is for $32,000. They might claim taxes were higher than expected or deduct amounts they believe you owe. Sometimes the math is wrong. Sometimes it's intentional.

They delay payment. The agreement says payment within 14 days. It's been 60 days. They keep saying "it's being processed" or "we're waiting on approval." Delay is breach.

They add new conditions. After you've already signed, they say you need to sign additional documents, complete a transition, or return property before they'll release the payment. If those conditions aren't in the original agreement, they're making it up.

The company is in financial trouble. Layoffs, restructuring, possible bankruptcy. The company may genuinely not have the cash. This doesn't extinguish the obligation, but it changes the collection strategy.

Step 1: Send a Demand Letter

Before you file a lawsuit, send a formal demand letter. This is a written notice to the employer that they've breached the severance agreement and you expect payment within a specified timeframe (usually 10 to 30 days).

A demand letter from an attorney carries more weight than one from you personally. It signals that you're serious, that you've consulted counsel, and that litigation is the next step. Many Los Angeles employers will pay at this stage rather than face a lawsuit.

The demand letter should identify the specific agreement, the specific breach, the amount owed, and the deadline for payment. It should reference that you'll pursue legal action if payment isn't received.

Step 2: Determine Where to Sue

If the demand letter doesn't work, you have several options for legal action:

Small claims court. If the amount owed is $12,500 or less (or $6,250 for businesses suing), you can file in small claims court. It's fast, inexpensive, and you don't need an attorney. Los Angeles County has small claims courts in multiple locations throughout the county.

Limited civil court. For amounts between $12,500 and $25,000, you file in limited civil court in the Los Angeles County Superior Court.

Unlimited civil court. For amounts over $25,000, you file in unlimited civil court. This is traditional litigation with full discovery, motions, and potentially a trial. Attorney's fees make this practical only for larger severance amounts unless the agreement includes an attorney's fees provision.

What You Can Recover

In a breach of contract action, you can typically recover:

The unpaid severance amount. Whatever they owe under the agreement.

Interest. California's prejudgment interest rate for breach of contract is 10% per year (Civil Code Section 3289). On a $50,000 severance that's a year late, that's $5,000 in interest.

Attorney's fees. Only if the severance agreement includes an attorney's fees provision. Many do. Check your agreement for language like "the prevailing party shall be entitled to reasonable attorney's fees and costs." If it's there, your employer is on the hook for your legal bills if you win.

Consequential damages. In some cases, you may be able to recover damages caused by the breach beyond the unpaid amount. For example, if the delayed payment caused you to miss a mortgage payment and incur penalties.

The Statute of Limitations

For written contracts (which severance agreements are), the statute of limitations in California is four years from the date of breach (Code of Civil Procedure Section 337). For oral agreements, it's two years (CCP Section 339). Don't wait four years, but know that you have time to make a strategic decision.

What About the Release You Signed?

Here's something important: if your employer breaches the severance agreement by not paying, the release of claims you signed may be voidable. The release was part of a contract. If the employer doesn't perform their side (payment), you may be able to argue that the entire agreement, including the release, is unenforceable. This means the claims you gave up could potentially be revived.

This is a strong negotiating position. If the employer realizes that nonpayment not only exposes them to a breach of contract claim but also resurrects the original employment claims (wrongful termination, discrimination, wage violations), they suddenly have a much stronger incentive to pay.

What to Do Right Now

Document everything. Save the signed severance agreement, all communications about payment, and records of what you received versus what was promised. Send communications in writing (email is fine) so there's a paper trail.

If payment is late, start with a polite but firm email to the responsible person (usually HR or the CFO). Reference the specific agreement section and deadline. If that doesn't produce results, escalate to a demand letter.

If your Los Angeles employer has breached your severance agreement, don't assume the money is gone. A breach of contract claim is straightforward, and the threat of reviving your released claims gives you significant leverage. Free consultations for employees throughout Los Angeles.