What's Negotiable in a California Severance Agreement?

Almost everything. That's the answer most people don't expect. Your employer's legal team drafted the agreement to be as favorable to the company as possible. But every provision in it can be discussed, modified, or removed. Here's a provision-by-provision breakdown of what you can push on.

The Money

Severance amount. This is always negotiable. The initial offer is rarely the maximum your employer is willing to pay. Counter-offers are expected. How much you can push depends on your leverage, particularly any potential legal claims you have.

Payment structure. Lump sum or salary continuation? Each has different tax and unemployment implications. A lump sum is typically better if you want a clean break. Salary continuation can extend your benefits enrollment period but may delay unemployment eligibility. You can negotiate which structure works for you.

Bonus and commission. If you're owed a pro-rated bonus or unpaid commission, this should be negotiated separately from severance. Some agreements try to roll everything into one number, which can obscure what you're actually getting.

Benefits

Health insurance continuation. COBRA is your legal right regardless. What you can negotiate is the employer continuing to pay their portion of the premium. Even three to six months of employer-paid COBRA coverage can be worth $5,000 to $15,000 in the Los Angeles market, depending on your plan.

Life and disability insurance. Some employers will extend these coverages beyond your termination date as part of the severance package.

Outplacement services. Career coaching, resume help, and job placement assistance. These services retail for thousands of dollars but cost the employer less through corporate contracts.

Equity and Stock

Unvested stock options and RSUs. If you have equity that hasn't vested yet, you can negotiate for accelerated vesting of some or all of those shares. This is particularly relevant for employees at LA-area tech companies and startups.

Exercise window. If you have vested stock options, the standard 90-day post-termination exercise window may not be enough time, especially if you need the stock to appreciate before exercising makes financial sense. You can negotiate for a longer window, sometimes up to a year or more.

The Release of Claims

Scope of the release. Most agreements include a blanket release of "all claims." You may be able to narrow this to exclude specific types of claims, or at least to exclude claims you don't know about yet (though most employers will insist on the Section 1542 waiver).

Carve-outs. You can negotiate to preserve your right to file charges with government agencies like the Civil Rights Department (CRD) or the EEOC. Note that even with a release, you typically cannot waive your right to file a charge, though you can waive the right to recover money from it. But clarifying this in the agreement prevents confusion later.

Restrictions on You

Non-disparagement. Standard agreements say you can't say anything negative about the company. You can push for mutual non-disparagement (they can't trash-talk you either), carve-outs for truthful statements to government agencies, and clearer definitions of what counts as disparagement.

Non-compete. These are generally unenforceable in California under Business and Professions Code Section 16600. Push to remove it entirely. Even an unenforceable clause can cause problems with future employers who don't know California law.

Non-solicitation. Agreements often prevent you from soliciting former colleagues or clients. The enforceability of these clauses in California is limited, but you can still negotiate to narrow or remove them.

Confidentiality. You can negotiate what's confidential. For example, you might want the ability to tell future employers that you received a severance package, share the agreement with your spouse or financial advisor, or discuss general facts about your employment.

Your Departure Story

Reference language. Negotiate exactly what the company will say when contacted by future employers. A vague "we confirm dates and title" is the default. You can push for a positive written reference or agreed-upon language for your manager to use.

Resignation vs. termination. Some employees prefer the record to show a resignation rather than a termination. This is sometimes negotiable, though it can affect unemployment eligibility, so weigh it carefully.

Internal and external communications. How will the company explain your departure to your team and to clients? You can negotiate the language used in company announcements.

Other Provisions

Cooperation clause. Many agreements require you to cooperate with the company in future litigation or investigations. You can negotiate to limit this obligation, require advance notice, and ensure you're compensated for your time.

Return of property. Standard, but make sure you have adequate time to retrieve personal items and files. Also clarify who owns work product like contacts and research you created.

Dispute resolution. Some agreements include mandatory arbitration clauses. You can negotiate for the right to litigate in court instead, or at least ensure the arbitration provision is fair (employer pays costs, neutral arbitrator selection).

How to Approach the Negotiation

Don't try to negotiate 15 provisions at once. Prioritize what matters most to you and focus on those items. A targeted counter-proposal is more effective than a laundry list of demands.

If you're unsure what to prioritize or how much to push, talk to a Los Angeles employment attorney. We help employees across LA identify which provisions matter most and handle the negotiation directly. Free consultation to get started.