State file — California

Severance in California: the rules on your way out

Severance itself is almost never required by law — but the paper around your exit is. In California, three state rules shape your negotiation: when your last paycheck must arrive, whether a non-compete can follow you to your next job, and what notice a layoff required. If you are 40 or older, the federal clocks (21 or 45 days, plus 7 days to change your mind after signing) apply on top of everything here.

Your thinking-it-over clock in California

Yes - state clock, CONSIDERATION ONLY, no state revocation period. An employer offering an employee or former employee an agreement related to that employee's separation from employment must (1) notify the employee that the employee has a right to consult an attorney regarding the agreement, and (2) provide a reasonable time period of NOT LESS THAN 5 BUSINESS DAYS in which to do so. Scope: Gov. Code 12964.5(b) - it sits inside the subdivision that also bans provisions prohibiting disclosure of information about unlawful acts in the workplace in separation agreements and requires the statutory 'Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace...' language in any nondisparagement / disclosure-restricting provision; a general release/waiver is not prohibited if otherwise lawful. The employee MAY sign before the 5 business days run, if that decision is knowing and voluntary and not induced by fraud, misrepresentation, a threat to withdraw or alter the offer before the period expires, or different terms for early signers. Exceptions in 12964.5(d): the section does not apply to a negotiated settlement agreement to resolve an underlying FEHA claim that has been filed in court, before an administrative agency, in an ADR forum, or through the employer's internal complaint process. NO revocation right is created by 12964.5 - revocation (7 days) comes only from federal OWBPA for ADEA releases by workers 40+. Effective in this form Jan. 1, 2022 (SB 331, Silenced No More Act).

California also sets its own clock: California law covers agreements related to your separation (Gov. Code §12964.5): your employer must tell you about your right to talk to an attorney and give you at least 5 business days to consider. This state clock has no change-your-mind window of its own. 5 business days to consider. The checker applies it automatically — the later of your two dates is the safer one to work to.

Run the deadline checker — it counts the federal clock and California's clock together and gives you the dates.

Non-competes in California: void — this state bans most non-competes

Void for a typical employee. Every contract restraining anyone from engaging in a lawful profession, trade or business is to that extent void, and 16600 must be read broadly to void any employment non-compete / non-compete clause no matter how narrowly tailored, unless a statutory exception applies (sale of a business/goodwill, partnership or LLC dissolution - not a typical employee). Since Jan. 1, 2024: 16600.1 makes it unlawful to include or require a non-compete that does not satisfy an exception, and 16600.5 makes a contract void under this chapter unenforceable regardless of where or when it was signed, and bars an employer from entering into or attempting to enforce it.

Why it matters at the exit table: a non-compete you sign on the way out can matter more than the severance check. If the clause would block your next job, narrowing it is one of the most common — and most granted — negotiation asks.

Your last paycheck in California

Discharged or laid off: wages earned and unpaid are due and payable IMMEDIATELY at discharge. Narrow exception in the statute: a layoff of a group by termination of seasonal employment in curing/canning/drying perishable fruit, fish or vegetables counts as immediate payment if paid within a reasonable time not exceeding 72 hours.

Unused vacation: Yes - vacation is wages. Unless a collective bargaining agreement provides otherwise, if an employment contract or employer policy provides paid vacation, all vested (earned, unused) vacation must be paid as wages at the employee's final rate on termination, and a policy may not provide for forfeiture of vested vacation on termination. Because it is wages, it belongs in the final paycheck.

Final pay is owed whether or not you sign anything. If the date passes without your money, your state labor agency takes these complaints — and many states add penalties for every day of delay.

Layoff notice in California

California has its own layoff-notice law (a mini-WARN law): Yes - Cal-WARN.

Notice failures have their own remedies (back pay for each day of missed notice, in the federal law's case) — separate from the severance agreement, and worth a question if your layoff was large and sudden.

Sources:
Final pay: Cal. Lab. Code 201(a) (immediate pay on discharge); Cal. Lab. Code 227.3 (vested vacation paid as wages)
Layoff notice: Cal. Lab. Code 1400-1408, esp. 1400.5 (definitions in current numbering 1400) and 1401 (notice); liability at 1402
Non-compete: Cal. Bus. & Prof. Code 16600 (as amended by AB 1076, eff. Jan. 1, 2024); 16600.1; 16600.5 (SB 699, eff. Jan. 1, 2024)
Agreement clock: Cal. Gov. Code 12964.5(b)(4) (consideration / attorney notice); 12964.5(b)(1)-(3) (scope); 12964.5(d)(1) (negotiated-settlement exception); 12964.5(a) contains the parallel rule for agreements entered as a condition of employment / continued employment
Being double-checked Layoff notice, Agreement clock — researched from secondary sources and being re-verified against the official text. The official source linked is the authority.

Before you sign, run the whole paper

Included in the $49 SeveranceDecoded Kit

  • The clause-by-clause decoder — every clause in plain words: what it means, what to look for, the exact questions to raise
  • The paperwork audit (the legal checklist) — every item the law names for workers 40+, checked against your documents
  • The group layoff list audit (Exhibit A) — titles and ages of who was picked and who was not, checked line by line. No other tool does this
  • The negotiation playbook — what companies actually move on (money, dates, stock deadlines, the non-compete, your reference) and the words that move them
  • Ready-to-send scripts: asking for more time, asking for changes, and the change-your-mind letter (revocation)
  • The red-flag page — the short list of facts that mean a lawyer's paid hour is worth it, and how to find one who does this daily
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