Can An Employer Provide Severance Other Than Money in California? 2025

If you’re facing termination from a job, you may be wondering, “Can an employer provide severance other than money in California?” Severance packages are generally associated with monetary compensation given to employees after termination. However, in California, employers can structure severance agreements to include benefits beyond cash payments.

Severance pay is not a legal requirement in California unless it is stipulated in an employment contract, collective bargaining agreement, or company policy. Your employer may offer severance to provide financial assistance after your departure and to mitigate legal disputes. While severance could entail a lump sum payment, it might take other forms, as well.

Non-Monetary Severance Benefits Employers Can Offer

Companies can offer many non-monetary severance benefits to employees. Some of these include:

• Extended health benefits. Employers may offer continued health insurance coverage as part of a severance package. Employees are eligible for COBRA, which lets them continue the company health insurance coverage at their own expense. However, the company may offer to pay all or a portion of the COBRA premiums for a set amount of time.
• Outplacement services. Employers occasionally offer outplacement services, providing help finding a new job. These services could include resume writing assistance, career counseling, and interview coaching, in addition to job search support. This can help an employee find a new job faster.
• Stock options. For larger companies, employees may receive additional stock options as part of the severance package. This can be especially valuable for employees in startups or publicly traded companies where stock values are significant.
• Deferred compensation. Deferred compensation involves payments or benefits provided at a later date. This can be helpful for tax and financial planning. However, this arrangement must comply with IRS regulations.
• Continuation of workplace perks and benefits. Some employers also extend workplace perks, such as access to a company car, gym memberships, use of company phones, or professional development programs.
• Consulting agreements. Employers may offer a consulting agreement that allows departing employees to consult for the company in exchange for compensation and benefits. This can be a strategic way for companies to retain institutional knowledge while aiding the former employee financially.
• Reference or letters of recommendation. A written letter of recommendation or a commitment to provide a reference can be a valuable part of a severance package when the employee is seeking new employment.
• Tuition reimbursement or training programs. On occasion, the employee may receive help paying to further their education or obtaining certifications and professional training as part of the severance package to help make them more employable in the future.
• Retention of company-owned intellectual property. An employer may allow the employee to retain certain intellectual property gained while employed, such as patents, trademarks, or proprietary content.
• Non-compete modifications. Although non-compete agreements are not enforceable in California, employers may agree to waive the restriction as part of the severance package.

Legal Considerations When Offering Non-Monetary Severance

Employers must be sure severance agreements comply with California labor laws. Non-monetary severance benefits might also have tax implications, especially in cases of stock options, deferred compensation, and health benefits.

Severance agreements should be well-documented to ensure both parties understand their rights and obligations. Clearly outlining the terms of the non-monetary benefits prevents misunderstandings and potential disputes. It’s always a good idea to seek legal advice in the event that you need help understanding the terms and your rights associated with a severance package.

FAQs About Non-Monetary Severance Law in California

What Are the Guidelines for Severance?

Severance guidelines vary by employer but commonly include payment based on years of service, continued health benefits, and payment for unused paid time off. Severance agreements may contain confidentiality clauses, non-compete agreements, or waivers of legal claims. In California, employers cannot require employees to waive claims related to workplace harassment, discrimination, or retaliation. Severance agreements must also comply with federal laws.

What Must an Employer Provide When Terminating an Employee in California?

In California, employers must provide a final paycheck, including all unpaid wages, accrued vacation day pay, and commissions, by the last day of employment if termination is involuntary. Employers must also provide information about COBRA or health benefits. If the employer offers a severance package, it must comply with California laws regarding waivers and review periods. However, an employer can provide severance other than money in California, as well.

What Is the Standard Severance Package in California?

A standard severance package in California often includes a paycheck for additional weeks of service, depending on the length of time you worked for the company. It may also include health benefits that continue for a designated length of time and payment for any unused vacation days. Executive employees may receive a more generous severance package that includes stock options or bonuses.

What Is the 72-Hour Rule in California?

California’s 72-hour rule applies to employees who voluntarily resign. If an employee quits without providing at least 72 hours notice, the employer must provide a final paycheck within 72 hours. This ensures timely payment and protects employees from wage delays. If the employer fails to comply, they can face penalties that include continued wages for each day the paycheck is late.

When Is the Right Time to Consult a Severance Agreement Lawyer?

The right time to consult a severance agreement lawyer is before signing the agreement. If you believe the terms aren’t fair, too restrictive, or waive your legal rights, you need legal consultation. In addition, if you suspect wrongful termination, discrimination, or retaliation from your employer, a severance agreement lawyer can help assess whether you have a legal claim. Consulting a lawyer immediately gives you a better chance of negotiating for a stronger severance package and helps protect your rights.

Reach Out to a California Severance Package Agreement Lawyer Today

The Law Offices of Corbett H. Williams is dedicated to providing employees, business owners, and individuals with quality legal representation. We protect the rights of Californians facing business disputes, harassment, wrongful termination, and wage and hour violations. Our strategic analytical approach ensures a thorough understanding of each case, with solutions tailored to each client’s needs.

Contact our office today to schedule a consultation.