Severance Agreement - California

SEVERANCE AND MUTUAL RELEASE AGREEMENT

(California – Single Employee Termination)

TABLE OF CONTENTS

1. Document Header
2. Definitions

3. Operative Provisions
   3.1 Termination of Employment
   3.2 Severance Benefits
   3.3 Acknowledgment of Adequate Consideration
   3.4 Tax Matters
   3.5 Return of Company Property & Transition

4. Mutual Representations & Warranties

5. Property and Protected Communications

6. Release and Waiver of Claims
   6.1 General Mutual Release
   6.2 Counsel, Review, and Optional Individual ADEA Waiver
   6.3 California Civil Code § 1542 Waiver
   6.4 Carve-Outs (Non-Waivable Claims)
   6.5 No Indemnity, Clawback, or Liability Cap

7. Remedies

8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

This Severance and Mutual Release Agreement (this “Agreement”) is offered on [OFFER DELIVERY DATE] by [FULL LEGAL NAME OF EMPLOYER], a [FORM OF ENTITY] organized under the laws of [STATE] (“Company”), to [EMPLOYEE LEGAL NAME] (“Employee,” and together with Company, the “Parties,” and each, a “Party”). Its effective date is determined under Section 6.2, after both Parties sign.

WHEREAS, Employee’s employment with Company will terminate effective [TERMINATION DATE] (the “Termination Date”); and
WHEREAS, Company desires to provide Employee with certain severance benefits in exchange for the releases, covenants, and agreements set forth herein;

NOW, THEREFORE, in consideration of the mutual promises herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows.

2. DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings set forth below. Capitalized terms not defined herein shall have their plain English meaning consistent with prevailing California employment law.

“Agreement” means this Severance and Mutual Release Agreement, including all exhibits and schedules.

“ADEA” means the federal Age Discrimination in Employment Act of 1967.

“Claims” means any and all actions, causes of action, charges, complaints, contracts, covenants, agreements, promises, debts, damages, judgments, demands, costs, losses, liabilities, and expenses of any kind or character, known or unknown, suspected or unsuspected, fixed or contingent.

“Release” means the release of Claims described in Section 6.1.

“Severance Benefits” has the meaning provided in Section 3.2(a).

3. OPERATIVE PROVISIONS

3.1 Termination of Employment

(a) Employment Termination. Employee’s employment with Company shall terminate on the Termination Date.
(b) Final Wages & Accrued Benefits. Under the ordinary rule in Cal. Lab. Code § 201, earned and unpaid wages are due immediately when Company discharges Employee; limited statutory exceptions may apply. For a resignation without a written contract for a definite period, § 202 generally requires payment within 72 hours, or at quitting if Employee gave 72 hours' notice. Under § 227.3, vested vacation must be paid when an employment contract or policy provides paid vacation, unless a collective-bargaining agreement provides otherwise. Necessary business-expense reimbursements remain payable under § 2802. Company will pay independently owed amounts when law requires, whether or not Employee signs. No severance payment is consideration for wages or reimbursements already due. Record the calculation and ordinary payment date: wages [____]; vacation [____]; expenses [____]; other independently owed benefits [____].
(c) No Additional Severance. Except as stated in this Agreement, Company promises no additional severance benefit. This sentence does not waive earned compensation, vested benefits, reimbursements, or another nonwaivable right.

3.2 Severance Benefits

(a) Severance Payment. Subject to Employee’s timely execution and any applicable non-revocation of this Agreement, Company shall pay Employee a lump sum of $[SEVERANCE AMOUNT] (the “Severance Benefits”) within [NUMBER] days after the Effective Date defined in Section 6.2.
(b) COBRA Subsidy. [OPTIONAL] Company shall pay [___]% of Employee’s COBRA premiums for [NUMBER] months following the Termination Date, subject to Employee’s timely election of COBRA continuation and applicable plan terms.
(c) Outplacement Services. [OPTIONAL] Company will provide outplacement assistance through [VENDOR] for [NUMBER] months.

3.3 Acknowledgment of Adequate Consideration

Employee acknowledges that the Severance Benefits constitute consideration to which Employee is not otherwise entitled absent execution of this Agreement.

3.4 Tax Matters

All payments under this Agreement are subject to required withholding. The payment schedule must be reviewed by benefits and tax counsel before use; this template makes no tax-compliance representation to Employee.

3.5 Return of Company Property & Transition

(a) Return of Property. No later than the Termination Date, Employee shall return Company keys, devices, and records identified here: [LIST / NONE]. Employee may retain documents that law permits or requires Employee to keep, and the Parties shall preserve records subject to a legal hold.
(b) Post-Separation Services. Any requested services after the Termination Date require a separate written scope and lawful compensation arrangement; the Severance Benefits do not purchase unrecorded or uncompensated work.
(c) References. Company's reference contact is [NAME AND CONTACT]. The agreed response, if any, is [DATES/TITLE/ATTACHED LETTER/OTHER/NONE]. Company will give Employee a receipt for property returned.

4. MUTUAL REPRESENTATIONS & WARRANTIES

4.1 Authority. Each Party represents that it has full power and authority to enter into this Agreement and that doing so will not violate any contractual or legal obligations.
4.2 No Reliance. Each Party acknowledges that it has not relied on any statement or representation not set forth in this Agreement.
4.3 Voluntary Execution. Each Party represents that it enters this Agreement voluntarily, without coercion, and after having had the opportunity to consult legal counsel.

5. PROPERTY AND PROTECTED COMMUNICATIONS

This Agreement creates no new confidentiality, nondisparagement, noncompetition, or nonsolicitation promise. Nothing in this Agreement prevents Employee from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct Employee has reason to believe is unlawful. Employee may communicate with government agencies, make reports, respond truthfully to legal process, and participate in investigations without notifying Company. A separate restriction requires its own review and signed terms; this Agreement does not validate an earlier restriction.

6. RELEASE; WAIVER OF CLAIMS; INDEMNIFICATION

6.1 General Mutual Release

(a) Employee Release. Subject to Sections 6.2 and 6.4, Employee releases Company and its affiliates, officers, directors, employees, and agents (collectively, “Company Released Parties”) from lawfully waivable employment-related Claims based on acts occurring on or before the date Employee signs this Agreement. Particular known disputes intended to be resolved: [DESCRIBE / NONE]. ADEA claims are released only if the individual ADEA-waiver option in Section 6.2 is selected and completed; state age-discrimination claims are excluded under either route. It does not release wages that remain unpaid in violation of Cal. Lab. Code § 206.5.
(b) Company Release. Company releases Employee and Employee’s agents and heirs (collectively, “Employee Released Parties”) from employment-related Claims based on acts occurring on or before Company signs this Agreement, excluding any specifically identified claim listed here: [________________________________]. An undisclosed generic fraud or misconduct exception is not retained after execution.

6.2 Counsel, review, and optional individual ADEA waiver

Company advises Employee in writing of the right to consult an attorney before signing and allows at least five business days after delivery of the completed offer for that consultation under Cal. Gov. Code § 12964.5(b)(4). Offer delivered [DATE]; five-business-day review ends [DATE]. Employee may sign earlier only by a knowing and voluntary choice without fraud, misrepresentation, threatened withdrawal or change of the offer, or different terms for early signing.

Select exactly one route:

☐ No ADEA waiver. Employee retains all age-discrimination claims. The Agreement becomes effective on the later Party's signature date; the seven-day ADEA revocation period below does not apply.

☐ Individual ADEA waiver. This route is for a single-employee termination offer, not a group or class program. In exchange for the additional Section 3.2 benefits, Employee knowingly waives lawfully waivable claims under the Age Discrimination in Employment Act (ADEA) arising on or before Employee's signature date. Employee is advised in writing to consult an attorney. Company gave Employee at least 21 calendar days from its final offer to consider this route: final offer delivered [DATE]; 21-day period ends [DATE]. Company will not require a signature before the period ends. Employee may revoke by written notice received by [CONTACT NAME/TITLE] at [ADDRESS/EMAIL] within seven calendar days after Employee signs. If not revoked, the Agreement becomes effective on the eighth calendar day after Employee signs or, if later, when Company signs. It releases no future claim. For a group or class termination program, use a separately reviewed agreement with the 45-day period and the written information required by 29 U.S.C. § 626(f)(1)(H).

If neither route is selected, no ADEA claim is released and the no-ADEA route governs. No route may waive a claim arising after Employee signs. The date determined by the selected route is the “Effective Date.”

6.3 California Civil Code § 1542 Waiver

California Civil Code § 1542 provides:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”

Each releasing Party must choose and initial one box. A waiver never expands the persons, subject matter, signature-date cutoff, or nonwaivable-right exclusions in this Agreement.

Employee: ☐ [INITIALS] Keep § 1542 protection; unknown claims outside a general release are not released. ☐ [INITIALS] Knowingly waive § 1542 protection for otherwise releasable claims within Section 6.1(a).

Company: ☐ [INITIALS] Keep § 1542 protection. ☐ [INITIALS] Knowingly waive § 1542 protection for otherwise releasable claims within Section 6.1(b).

If a releasing Party makes no selection, that Party keeps § 1542 protection.

6.4 Carve-Outs (Non-Waivable Claims)

Nothing in this Agreement waives or limits: (i) a claim arising after Employee signs; (ii) independently owed wages, reimbursements, or vested plan benefits; (iii) enforcement of this Agreement; (iv) any state age-discrimination claim, or an ADEA claim unless the individual waiver route is selected and valid; (v) Employee's right to communicate with or participate in a government agency or court process, or to receive an award where law permits; (vi) a workers' compensation or unemployment benefit; or (vii) any other claim or right that applicable law does not permit private parties to waive. Specific additional exclusions: [DESCRIBE / NONE].

6.5 No Indemnity, Clawback, or Liability Cap

This Agreement does not impose employee indemnity, a release-challenge penalty, a severance clawback, or a liability cap. For a challenge to an ADEA waiver, the Employee need not return consideration before filing a claim, and retaining it does not ratify the waiver. If the Employee prevails on an ADEA claim after successfully challenging the waiver, a court may determine whether limited restitution, recoupment, or setoff against the monetary award is appropriate. 29 C.F.R. § 1625.23.

7. REMEDIES

7.1 Remedies. A Party may seek lawful contract remedies for a proven material breach. Nothing here delays statutory wage payment, restricts agency access or protected communications, penalizes a good-faith challenge to the release, or creates an automatic prevailing-party fee shift.

8. DISPUTE RESOLUTION

8.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California and applicable federal law, without regard to conflict-of-laws principles.
8.2 Forum. Any action concerning this Agreement may be filed in a California state or federal court that has subject-matter and personal jurisdiction and proper venue.
8.3 Arbitration. No arbitration clause is included. If the Parties choose arbitration, use a separately reviewed addendum addressing formation, costs, discovery, remedies, and governing law.
8.4 Jury Trial. No predispute jury waiver is included in this template.

9. GENERAL PROVISIONS

9.1 Amendment; Waiver. This Agreement may be amended only by a written instrument signed by both Parties. No waiver shall be effective unless in writing and signed by the Party waiving.
9.2 Assignment. This Agreement is personal to Employee and may not be assigned. Company may assign this Agreement to any successor in interest.
9.3 Severability; Reformation. If any provision is held invalid, the remainder shall remain in full force, and the invalid provision shall be reformed to the minimum extent necessary to be valid and enforceable.
9.4 Entire Agreement. This Agreement constitutes the entire understanding between the Parties and supersedes all prior agreements, whether written or oral, with respect to the subject matter hereof.
9.5 Counterparts; Electronic Signatures. The Parties may sign counterparts and may use electronic signatures when permitted by the transaction platform and applicable law.
9.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

10. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the dates set forth below.

Sources and References

• 29 U.S.C. § 626(f) — ADEA waiver requirements
• 29 C.F.R. § 1625.22 — ADEA waivers
• 29 C.F.R. § 1625.23 — tender back and challenges to ADEA waivers
• Cal. Lab. Code §§ 201–202 — final wages
• Cal. Lab. Code § 206.5 — wage-release restriction
• Cal. Lab. Code § 227.3 — vested vacation
• Cal. Lab. Code § 2802 — expense reimbursement
• Cal. Civ. Code § 1542 — unknown claims
• Cal. Gov. Code § 12964.5

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