Conditions for severance pay in California 

On Behalf of | Aug 20, 2021 | Employment Law

There are two approaches to negotiating a severance package: You can do it before accepting a work agreement and upon leaving a job. Most people are aware that severance packages can be negotiated before accepting a job, but many are surprised to hear that there is an opportunity to negotiate a severance package when departing from a job, as well. 

Severance packages are designed to lessen the impact and stress of losing a job while looking for new employment. Severance packages can also include continued insurance benefits, job placement assistance and many other perks. 

Requirements for receiving severance pay

According to the Employment Development Department (EDD) of the State of California, the following are conditions that can qualify for severance pay:

  • Company policy: The payments follow the existing current company plan or policy.
  • Specific termination requirements: The loss of employment must be due to a specific reason, such as downsizing, bankruptcy, workforce reduction, company closure, etc.
  • Supplementation of unemployment insurance benefits: Severance packages are designed to supplement unemployment benefits for a certain class or group of employees.

The severance benefits may not state the specific purpose for the payments, nor is every employee necessarily eligible for them. Severance packages serve multiple functions which include a financial cushion while being unemployed to rewarding and recognizing past employees for their years of faithful service and contribution. They’re also used to buy a certain amount of loyalty and can be used with nondisclosure agreements or other deals between the employee and employer

In the past, severance was common to be paid in lump sums. However, these days it is more common for employers to issue severance payments over time through regular severance payments.

When your job comes to an unexpected end, it can be challenging to know exactly what one is entitled to receive — or how much room there is for negotiation. Negotiating is a technical process that can be aided by having professional guidance that is familiar with California’s employment laws to make sure that your rights are protected.