July 10, 2024

Minimum Waiting Period for Severance Agreements in California

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At ILG Legal Office, P.C., we understand how challenging it can be to navigate the complexities of employment law, especially when ending a job. One area where employees must be vigilant is in understanding the severance agreement process. Under California Government Code 12964.5(b)(4), specific protections are put in place regarding the waiting period for severance agreements, designed to ensure that employees have adequate time to review and consider the terms being offered. Here’s what you need to know:


What is the Waiting Period?

The waiting period is a crucial time frame that California law provides to employees before they can be required to sign a severance agreement that includes a release or waiver of rights. Specifically, California Gov Code 12964.5(b)(4) sets a mandatory waiting period of at least five business days. This period allows employees the necessary time to review the severance agreement thoroughly and consult with legal counsel to ensure the terms are fair and in their best interest.

Note that other waiting periods may be triggered depending on the specific circumstances at issue. This article outlines the bare minimum waiting period applicable to a severance agreement in California. Details about the worker, such as age, may trigger longer waiting periods. Similarly, other circumstances regarding the termination may trigger additional waiting periods. Check out our other posts for more information on longer waiting periods that may apply.


Why is the Waiting Period Important?

The waiting period serves several essential purposes:

  • Protection from Pressure: It protects employees from being pressured into signing an agreement quickly without having the opportunity to understand the implications.
  • Legal Consultation: It provides the opportunity to consult with an attorney who can provide advice on the severance agreement’s contents, including what rights are being waived and the benefits being received.
  • Consideration of Alternatives: Employees can consider whether negotiating for better terms is possible or even necessary.


Your Rights During the Waiting Period

During the waiting period, you, as an employee, have the right to:

  • Seek Legal Advice: You are encouraged to use this time to consult with an employment law attorney who can provide guidance specific to your situation.
  • Negotiate Terms: If you believe the terms are not favorable, this is the time to discuss potential changes with your employer.


Exemption from Minimum Waiting Period

There are two exemptions that commonly arise regarding this mandatory waiting period for severance agreements: (1) Very small companies with less than five employees and (2) agreements to resolve formal complaints.

  • (1) According to FEHA, an “employer” includes “any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly ….” Cal. Gov’t Code § 12926(d). See Rohm v. Homer, 367 F. Supp. 2d 1278, 1285 (N.D. Cal. 2005). Thus, if an employer has one to four total employees, this rule does not apply.
  • (2) This waiting period does not apply to agreements negotiated after a formal claim has been submitted. This means that the minimum waiting period discussed herein does not apply if you sign a settlement agreement after filing a formal claim in court, arbitration, or before an administrative agency like the federal EEOC or California’s Civil Rights Department (previously named the Department of Fair Employment and Housing). The exemption also has a vague reference indicating that this severance agreement waiting period does not apply if the employee filed a claim “through an employer’s internal complaint process.”


How ILG Legal Office, P.C. Can Help

At ILG Legal Office, P.C., we specialize in employment law and are committed to ensuring that employees fully understand their rights and options. If you are presented with a severance agreement, our experienced attorneys can help you review and negotiate the terms to ensure they meet your needs and reflect your contributions to the company.

Understanding your rights under California Gov Code 12964.5(b)(4) is vital in ensuring you make informed decisions about your employment transition. If you find yourself needing to negotiate a severance agreement, do not hesitate to reach out for professional legal support.


For more information or to schedule a consultation, please contact us at ILG Legal Office. Our team is here to help guide you through every step of the severance agreement process, ensuring your rights are protected and your future is secured.