What Happens If I Don't Sign My Severance Agreement?

You're staring at a severance agreement and thinking about just not signing it. Maybe the offer feels insultingly low. Maybe you don't like the restrictions. Maybe you think you were wrongfully terminated and signing feels like letting them off the hook. Whatever the reason, you want to know: what happens if you just say no?

What You Lose

The straightforward part: if you don't sign, you don't get the severance payment. That's the trade-off your employer set up. They pay you severance, and you release your legal claims. No signature, no payment.

Depending on the agreement, you might also lose extended health insurance benefits beyond COBRA, outplacement services, or other perks the company included in the package.

What You Keep

Here's the part most people don't fully understand. You keep a lot.

Your final paycheck. All earned wages, accrued vacation, and expense reimbursements are yours under California Labor Code Sections 201 through 203. These have nothing to do with the severance agreement.

Your right to file for unemployment. Being terminated qualifies you for unemployment benefits in California in most cases. Your employer cannot condition unemployment eligibility on signing a severance agreement.

Your legal claims. This is the big one. Every claim you have against your employer remains intact. Discrimination, wrongful termination, retaliation, wage violations, harassment. All of them. The whole point of the severance agreement is to get you to waive these. If you don't sign, they're all still on the table.

Your COBRA rights. You have the right to continue your health insurance through COBRA for up to 18 months regardless of whether you sign a severance agreement. You'll have to pay the full premium (plus a small administrative fee), but the option is yours by law.

When Not Signing Is the Right Call

Refusing to sign isn't always about being stubborn. Sometimes it's the smart move.

You have strong legal claims. If you were terminated because of your age, race, gender, disability, pregnancy, or because you blew the whistle on illegal activity, your potential legal recovery in a Los Angeles County Superior Court case could be multiples of the severance offer. Signing that release would mean trading a potentially six-figure claim for a few weeks of pay.

The offer is unreasonably low. If your employer is offering one week of severance after 10 years of service, refusing to sign can be the first step in a negotiation. Not signing doesn't have to mean walking away permanently. It often means coming back with a counter-offer.

The restrictions are too broad. Maybe the non-disparagement clause effectively gags you. Maybe the confidentiality provision prevents you from discussing your employment with future employers. Maybe there's a non-compete clause that, while unenforceable in California, could still create headaches. If the terms are unreasonable, refusing to sign is leverage to get them narrowed.

When Not Signing Could Hurt You

There are situations where refusing to sign might not be in your best interest.

You don't have viable legal claims. If the termination was legitimate, you weren't discriminated against, and you don't have wage claims, the severance payment might be the best outcome available. Walking away from it means walking away from free money.

You need the money now. Financial pressure is real. If you need the severance payment to cover rent and bills while you job search, that practical need matters. But even then, you might be able to negotiate a better deal rather than just accepting or refusing outright.

The offer has an expiration date. Some employers set a deadline after which the offer is withdrawn. If you're over 40, they must give you at least 21 days (45 for group layoffs) under the OWBPA. But once that deadline passes, the employer is under no obligation to make the same offer again.

The Middle Ground: Negotiate Instead

Most of the time, the choice isn't simply "sign" or "don't sign." It's "negotiate." You can counter the offer with a higher number, better terms, or both. Employers expect this. Their first offer is almost never their best offer.

A Los Angeles employment attorney can evaluate whether you have claims that give you negotiating leverage, draft a counter-proposal, and handle the negotiation directly with your employer's legal team. This process usually takes days, not months.

What If You Already Said No?

If you've already refused the severance agreement, that doesn't necessarily mean the door is closed. Employers often come back with a better offer, especially if they're worried about potential legal exposure. And if they don't come back, you still have your legal claims.

Whether you're weighing whether to sign, have already refused, or just want to understand your options, schedule a free consultation with our employment attorneys. We help employees throughout Los Angeles figure out the best path forward based on their specific situation.