What Is a General Release of Claims in a Severance Agreement?

The general release of claims is the entire reason your severance agreement exists. Everything else, the money, the benefits, the non-disparagement clause, is structured around this one provision. Your employer is paying you severance in exchange for your agreement to never sue them. That's the deal.

Understanding what this release actually covers is the most important thing you can do before signing.

What You're Giving Up

A typical general release in a California severance agreement waives your right to bring any legal claim against your employer arising from your employment. Los Angeles employees encounter these releases regularly during layoffs and terminations. The language is intentionally broad. It usually covers:

Wrongful termination. If you were fired for an illegal reason, signing the release means you can't sue for it.

Discrimination. Claims under the Fair Employment and Housing Act (FEHA), Title VII, the Americans with Disabilities Act, and the Age Discrimination in Employment Act. Race, age, gender, disability, pregnancy, sexual orientation, religion, national origin. All covered by the release.

Harassment. If you experienced workplace harassment and didn't sue before signing, the release typically covers it.

Retaliation. Claims under California Labor Code Section 1102.5 and other whistleblower protections.

Wage and hour claims. Unpaid overtime, missed meal and rest breaks, misclassification as exempt, unreimbursed business expenses.

Breach of contract. If your employer broke promises about your employment, signing the release waives those claims too.

Any other claim. Most releases include a catch-all provision covering "any and all claims, known or unknown, arising from your employment." This is designed to leave no gap.

The Section 1542 Waiver

This is the provision most people miss, and it's one of the most significant in the entire agreement.

California Civil Code Section 1542 says: "A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party."

In plain English: normally, a release only covers claims you know about. Section 1542 protects you from accidentally giving up claims you haven't discovered yet.

Your severance agreement will almost certainly ask you to waive this protection. You'll see a paragraph that specifically references Section 1542 and says you're giving it up. This means you're releasing claims you don't even know you have. If you discover six months later that your employer was stealing from your 401(k) or that your manager was making discriminatory decisions you weren't aware of, you've already released those claims.

What Can't Be Released

Even with a broad general release, certain rights cannot be waived under California law:

Workers' compensation benefits. You cannot waive your right to file a workers' comp claim.

Unemployment benefits. Your right to file for unemployment through the EDD is not waivable.

The right to file government complaints. You can release the right to recover money from a discrimination charge, but you cannot release the right to file a charge with the Civil Rights Department (CRD), the EEOC, or the DLSE. These agencies serve a public interest beyond your individual claim.

Future claims. The release covers claims that have already arisen. It cannot waive claims based on events that happen after you sign.

Indemnification rights. Under California Labor Code Section 2802, your right to indemnification for losses suffered in the course of employment survives the release.

Why the Release Matters More Than the Money

Here's the part most people don't think about. The severance payment has a defined value. It's $5,000, $20,000, whatever the number is. But the claims you're releasing might be worth much more. A strong discrimination case filed in Los Angeles County Superior Court can result in damages of $50,000, $100,000, or more. A wage and hour class action exposure could be worth millions to the company.

The severance payment is what you see. The release is what the company is really paying for. Before you sign, you need to know what those claims are worth so you can decide whether the trade is fair.

How to Evaluate the Release Before Signing

Read every word of the release provision. Don't skim it. Know exactly what categories of claims are listed.

Understand the Section 1542 waiver. Know that you're giving up unknown claims. Consider whether that's acceptable given the severance amount.

Evaluate your potential claims. Have an employment attorney assess whether you have discrimination, retaliation, wage, or other claims that are worth more than the severance being offered.

Ask whether the release can be narrowed. In some cases, you can negotiate to exclude certain types of claims or to preserve specific rights.

The release is the heart of the severance agreement. Everything else is details. Make sure you understand what you're signing away before you sign. Contact our team for a free review if you want a professional evaluation. We serve employees throughout Los Angeles and Southern California.