Severance agreement

What does “severance agreement” mean?

A severance agreement is a contract in which an employer provides consideration beyond what is already owed, in exchange for the employee's release of claims.

The consideration has to be something the employee was not already entitled to. Paying earned wages or accrued vacation is not consideration, because those were owed regardless.

California restricts what a severance agreement may contain, particularly around provisions that would prevent disclosure of unlawful conduct.