When your employer offers to pay you severance upon termination...

Many employees give in the temptation of accepting a lump sum severance upon termination, even when the lawfulness of that termination is questionable. If you find yourself with an offer of severance, I highly recommend that you take your time to consider the severance offer before you accept it. 

One of the common reasons that an employer may offer severance to the employee who is about to be terminated is because the circumstances of the termination are questionable and might give rise to legal action by employee. An employer usually requires an employee to sign General Release of All Claims in exchange for severance compensation. By signing that release, the terminated employee waives any and all rights to pursue legal action against the employer. Often, by accepting the severance package, the employee, gives up on his ability to pursue legal claims that might be ground for a much greater compensation / damages.  But even if the employer conduct is not tainted with unlawful practice and termination, your severance offer might be highly negotiable. 

Regardless of of the terms or your employment and severance payment, you have the right to consult an attorney when executing the severance agreement (most severance agreements remind the employee that he has the right to be represented by an attorney in accepting the severance contract). 

If you would like to discuss the terms of your lay-off/resignation/termination with a qualified professional, contact Arkady Itkin - San Francisco employment lawyer to discuss your employment separation.

Severance pay and unemployment compensation

Many employee who are about to be laid off are concerned about accepting the offered severance package, as they fear that accepting a lump sum severance from their employer will disqualify them from unemployment benefits.
However, the good news for employees is that under California law, severance pay is not grounds for disqualification for unemployment insurance benefits. One court held that dismissal and severance pay received by employees from employer upon termination of employment was not “wages” for unemployment compensation purposes within provision of § 1265 that payments under plan established by employer for purpose of supplementing unemployment compensation benefit shall not be construed to be “wages”, and benefits shall not be denied because of receipt of payments under such plans. Powell v. California Dept. of Employment (1965) 45 Cal.Rptr. 136.