Don’t Sign Away Your Rights! Severance Agreements and Your Final Paycheck Explained by a California Employment Lawyer

It’s a Tuesday afternoon and you’re at your desk, working away. Suddenly, your phone rings. It’s your boss, asking you to come to his office. When you get there and see an HR rep present, you know what’s coming. 

What you don’t expect is that the HR rep tells you that you will not receive your final paycheck unless you sign a release that states, among other things, that you waive all claims against your employer.

You need the money, but you’re not comfortable with signing the agreement, especially since you believe you may have a future claim against the company. You complained to the department head last month about your boss’s sexist jokes, and he’s been treating you differently ever since. 

Now, he’s basically telling you that if you want your paycheck, you’ll forget about holding him accountable. 

Is this legal?

In California, you and your boss have the right to agree on the terms and conditions of your employment. This includes job location, hours worked, the nature of the work, etc. Unfortunately, too many employers believe that if they can get you to agree to something, the subsequent arrangement is legal and valid.

It’s not true.

There are specific obligations that an employer cannot bargain away. They include:

• Providing a safe work environment
• Providing worker’s compensation
• Paying overtime to non-exempt workers
• Paying all wages owed at the time of termination

Any agreement to surrender these statutory protections is not only void, but also a violation of California Labor Code section 206.5, which prohibits employers from requiring employees to sign a release or new contract before they receive their paycheck, overtime pay, or any other compensation that is legally due. 

Your boss cannot treat your unpaid wages as their personal property and (with few exceptions) deduct from them, attach them, or withhold them from you. If your employer refuses to pay before you sign the document, they are guilty of a misdemeanor and can be punished accordingly.

What should you do if your employer won’t pay?

If your employer asks you to sign such an agreement, let them know the following in writing, and retain a copy of the communication for your records:

• You refuse to sign it
• You believe that the request is a violation of Labor Code section 206.5
• You want immediate payment of all wages due despite your refusal to sign

If they ignore the letter or email or dispute your position, see a California employment lawyer who can help you protect your rights.

What if you already signed the agreement?

Living in California is not cheap. You need your wages to pay rent or the mortgage, purchase groceries, put gas in the car, and cover all other necessary living expenses. No one would blame you for signing out of fear or desperation.

Here’s the good news. If you have already signed the document, know that the agreement is null and void under California law and that your employer is now guilty of a misdemeanor. A California employment law firm may be able to help you pursue any valid claims against the company (e.g., wrongful termination) and hold them accountable for their actions.

Are you a California employee with questions for an employment attorney?

At SW Employment Law employment law is what we do — it’s what we’re passionate about, and it’s the sole focus of our law practice. 

We’re committed to effectively representing the rights of employees across the state of California — because we believe that everyone has the right to earn a living and provide for their family, free of unlawful discrimination and harassment. 

Our firm has won millions of dollars for employees all over California and we only take cases on contingency, which means we don’t get paid unless we win your case. Our fees come out of the court verdict or settlement with the company, so you don’t pay anything out of pocket. 

If you’d like our help evaluating your case and understanding the options available to you, we would love to help.