Does California law apply to my severance if I work remotely for a San Francisco company?

It depends. Employment law generally follows where the employee works, not where the company is headquartered. But California law may still apply if your employment agreement includes a California choice-of-law provision, if you occasionally worked in California, or if your claims involve conduct directed from California. The specific facts of your situation matter.

Can a San Francisco company enforce a non-compete against a remote worker in another state?

If California law governs your agreement, non-competes are void under Business and Professions Code Section 16600. If your home state's law applies instead, enforceability depends on that state's rules. States like Texas, Florida, and Georgia generally enforce reasonable non-competes. The choice of law provision in your agreement is critical.

Remote Worker Severance: SF Company, Different State

Q: Which state do I file for unemployment in as a remote worker?

You typically file in the state where you performed your work, which for remote employees is usually your home state. Your San Francisco employer should have been paying unemployment insurance in your state. If there's a discrepancy, file in your home state and let the unemployment agency sort out the employer's obligations.

You work for a company headquartered in San Francisco, but you live in Austin, Denver, Miami, or somewhere else entirely. You've been doing your job from a home office for the past few years. Now the company is laying you off and putting a severance agreement in front of you. Which state's laws apply? Does it matter that the company is in California? Can you claim California's stronger worker protections even though you've never set foot in the San Francisco office?

These questions come up constantly in the Bay Area. San Francisco companies have some of the largest distributed workforces in the country. Here's how it shakes out.

The General Rule: Where You Work Matters Most

Employment law typically follows the employee, not the employer. If you live and work in Texas, Texas employment law generally applies to your employment relationship, even if your employer is headquartered in San Francisco. Your paycheck was issued from California, your W-2 lists a California address, but the state where you physically perform your work is usually the controlling factor.

This means if you're a remote worker in a state with weaker employment protections, you generally can't claim California's more employee-friendly laws just because your employer is a San Francisco company.

But "generally" is doing a lot of work in that sentence. There are several exceptions that can pull California law into play.

When California Law Might Still Apply

You occasionally worked in California. If you traveled to the San Francisco office for meetings, offsites, or training, you may have California law protections for the time you spent there. California Labor Code applies to all work performed within the state, regardless of where the employee is based. Some courts have extended this to cover broader aspects of the employment relationship when there's a meaningful California connection.

Your employment agreement says California law applies. Many San Francisco companies include a "choice of law" provision in their employment agreements that designates California law as the governing law. If your agreement says California law applies and you're in a dispute about severance, that provision may be enforceable. Courts consider factors like whether the chosen state has a substantial relationship to the parties and whether applying that state's law would violate a fundamental policy of the state where the employee works.

California-specific claims. Certain California statutes have extraterritorial reach. For example, California's anti-discrimination laws under the Fair Employment and Housing Act (FEHA) can apply to conduct directed from California toward out-of-state employees. If a San Francisco manager fired you for a discriminatory reason, you may have FEHA claims even from another state.

Why California Law Matters for Severance

California's employment protections are among the strongest in the country. If California law applies to your severance, you benefit from:

Non-compete prohibition. Business and Professions Code Section 16600 makes non-competes void. If your severance includes a non-compete and California law applies, it's unenforceable. In states like Florida, Georgia, or Texas, non-competes are often upheld.

Broader anti-retaliation protections. California protects whistleblowers and employees who report violations more aggressively than most states. If your termination was retaliatory, California law provides stronger remedies.

SB 331 restrictions. California's Silenced No More Act prohibits severance agreements from including non-disclosure provisions related to workplace harassment, discrimination, or retaliation. Many other states have no equivalent law, meaning the same severance agreement might be partially unenforceable under California law but fully enforceable under your home state's law.

OWBPA protections for workers over 40. While this is federal law (the Older Workers Benefit Protection Act), California's enforcement and interpretation tend to be more protective. The 21-day review period and 7-day revocation period for individual severance agreements apply nationwide, but California courts scrutinize compliance more closely.

The Choice of Law Clause in Your Severance

Pay close attention to the governing law provision in your severance agreement. San Francisco companies typically draft their severance agreements under California law. If you're an out-of-state remote worker, this can actually benefit you in some ways (the non-compete prohibition) while potentially affecting you in others (California's tax treatment of severance payments).

If the severance agreement specifies a different state's law, or if it's silent on choice of law, the analysis becomes more fact-specific. Where were you hired? Where did you report? Where were the decisions about your employment made? All of these factors come into play.

Practical Issues for Remote Worker Severance

Tax withholding. Severance payments to remote employees create multi-state tax questions. California may try to tax severance from an SF-based company even if you live elsewhere. Your home state will also want to tax it. Make sure the severance agreement addresses tax withholding clearly so you don't end up with surprise obligations at filing time.

Return of equipment. Remote workers often have company laptops, monitors, and other equipment. The severance may require you to return everything within a short window. Make sure you've backed up any personal files before signing, and clarify who pays for shipping.

Non-solicitation enforceability. A San Francisco company may include employee or customer non-solicitation clauses in your severance. Whether these are enforceable depends on which state's law applies. In California, these are increasingly being struck down. In your home state, they may be fully enforceable.

Unemployment benefits. You typically file for unemployment in the state where you worked, which for remote employees is usually your home state. Your San Francisco employer should have been paying unemployment insurance in your state. If they weren't, it creates complications but doesn't prevent you from filing.

How to Protect Yourself

If you're a remote worker being offered severance by a San Francisco company, the first step is figuring out which state's law gives you the strongest position. That requires looking at your employment agreement, the severance agreement's choice of law provision, where you performed your work, and the specific claims you might have.

Don't assume your home state's law applies just because you live there. And don't assume California law applies just because the company is in SF. The answer depends on the specific facts.

Our employment attorneys work with remote employees of San Francisco companies across the country. Contact us for a free consultation to understand which laws protect you and how to use them in your severance negotiation.