When a California employee is presented with a severance agreement, understanding how to use leverage in severance negotiation is essential to improving the outcome. These agreements often feel like take-it-or-leave-it offers—decided without any input from the employee. But severance agreements are negotiable, and the key to securing better terms lies in knowing what leverage you have and how to apply it.
In this context, leverage in severance negotiation means identifying the legal, practical, or reputational risks your employer may face and using those realities strategically. Whether you’re seeking additional compensation, extended benefits, or clearer contract language, recognizing and applying your leverage can lead to significantly better results.
For a broader overview of the entire severance negotiation process—including strategy, tone, and timing—see our related blog: Effective Severance Agreement Negotiation.
What Is Leverage in Severance Negotiation—and Why Does It Matter?
Leverage is any legal or factual concern that increases the employer’s risk for a formal legal dispute (i.e. lawsuit) in connection with your termination. This could involve potential violations of California employment law, such as discrimination, retaliation, or wage violations, or actions that appear arbitrary or grossly unfair. Even if the employer believes it acted lawfully, the prospect of litigation still poses a threat that can adversely affect the employer, even if the employer ultimately prevails in the legal dispute. For instance, even if the employer wins the lawsuit and the employee is awarded nothing, the employer remains responsible for all of its own attorney fees and other legal costs, not to mention the significant business distraction and disruption that always is a significant component of every civil lawsuit involving a corporate defendant.
Unless there is a written company policy providing a severance benefit (which is very uncommon), an employer determines the amount of severance to pay a terminated employee arbitrarily. Because a terminated employee generally has no legal “right” to a severance payment, an employer considering making a severance payment offer to a terminated employee ordinarily will try to determine the least amount of money it would take to obtain the terminated employee’s signature on the severance (release) agreement; an employer’s initial severance offer rarely is its “best, last and final” offer.
Nevertheless, once the employer makes that initial determination, an employer rarely will voluntarily increase the offer unless given a compelling reason that goes beyond general unfairness. The facts, circumstances and argument a terminated employee makes in an effort to increase the initial severance offer is the terminated employee’s “leverage.” Leverage introduces new information—something the employer didn’t fully consider—that shifts the employer’s cost-benefit analysis in the employee’s favor. If you present a credible claim or concern, the employer may view an improved severance as a strategic decision: a way to manage risk, avoid a dispute, and close the matter cleanly.
What Are the Best Kinds of Leverage in Severance Negotiation?
Not all leverage is equal. The strongest leverage creates genuine legal or reputational risk for the employer—risk they may wish to avoid by offering a better severance package. Below are the most effective kinds of leverage, along with examples and sample phrasing that employees can use when raising these points.
Leverage Type #1: Credible Legal Claims (Retaliation, Discrimination, Wage Violations)
The most effective leverage in employment negotiations often stems from potential legal claims arising out of your employer’s conduct during your employment or at the time of your termination. If your termination followed a protected activity—such as reporting unpaid wages, raising safety concerns, or requesting a medical accommodation—you may have legal rights under California law. These legal claims create risk for the employer, including potential liability, litigation costs, and reputational harm.
Credible claims often fall under the following statutes:
- Labor Code § 1102.5 – Protects employees who report unlawful or noncompliant conduct by their employer, whether internally or to a government agency. Employers may not retaliate against workers for disclosing illegal activity.
- Labor Code § 6310 – Prohibits retaliation against employees who report unsafe working conditions or other violations of occupational safety and health laws.
- Government Code § 12940 (FEHA) – Prohibits discrimination, harassment, and retaliation based on protected characteristics such as race, gender, disability, age, and more. Also protects employees who request accommodations or complain about discrimination or harassment.
- Labor Code § 200 – Defines wages and compensation subject to protection under the Labor Code.
- Labor Code § 201–203 – Requires prompt payment of wages upon termination. Waiting time penalties may apply if the employer delays final pay.
- Labor Code § 204 – Requires regular, timely payment of wages during employment.
- Labor Code § 221 – Prohibits employers from recovering wages already paid to an employee, even if the employee did not meet a quota or sales goal, unless authorized by law.
- Labor Code § 226 – Requires employers to provide accurate itemized wage statements showing hours worked, pay rates, and other required information.
- Labor Code § 1194 – Allows employees to recover unpaid minimum wages or overtime, plus interest and attorney’s fees.
These laws support some of the most persuasive forms of leverage, particularly in cases involving wage violations. Wage claims are especially strong because they cannot be waived under California law—even as part of a severance or settlement agreement.
Effective example:
“On March 15, I filed a formal complaint with HR about unpaid commissions. One month later, I was placed on a PIP and terminated despite strong performance reviews.”
This kind of concise, fact-based timeline demonstrates a potential legal claim. By specifying dates and establishing a clear connection between the protected activity (HR complaint) and the adverse action (termination), the employee signals that their claim could withstand legal scrutiny.
Avoid:
- Vague statements such as “I was treated unfairly” without specific facts
- Unsupported or exaggerated legal claims
- Emotional accusations like “They hated me because I spoke up”
- Lengthy narratives—stay clear, factual, and concise in your own words
Well-grounded legal claims can shift the balance of power in negotiations. When presented strategically, they demonstrate that litigation risk is real—and credible.
Leverage Type #2: Timing of Termination (Near Retirement, During/After Medical Leave, or Following Protected Activity)
The timing of a termination can create powerful leverage, especially when it closely follows a protected activity or precedes an expected benefit. California law, including the Fair Employment and Housing Act (FEHA) and the Labor Code, prohibits employers from retaliating against employees for engaging in protected conduct, such as reporting workplace illegality or safety concerns, taking leave of absence because of a disability, or reporting or opposing workplace discrimination or harassment.
If you were terminated shortly after asserting your rights under FEHA or just before a significant benefit (like retirement eligibility, a scheduled bonus, or return from medical leave), this timing alone may raise a presumption of retaliation. Courts and juries often view suspicious timing as circumstantial evidence of unlawful motive. In Yanowitz v. L’Oreal USA, Inc., the California Supreme Court confirmed that retaliation can be proven through timing and other circumstantial evidence, even in the absence an express workplace complaint alleging discrimination.
Effective example:
“I was terminated just two weeks before I was scheduled to return from medical leave. I had no prior performance issues, and my leave was related to a documented disability.”
In severance negotiations, this type of leverage matters because it presents legal risk, even if the employer denies wrongdoing. When an employer terminates an employee in close proximity to a protected act, it invites scrutiny. Legal teams understand that defending against a retaliation claim can be costly and unpredictable, particularly if the facts suggest the termination was timed to interfere with the employee’s rights.
By raising concerns about timing, you’re not necessarily threatening to sue the employer; you’re pointing out that the circumstances of your termination could give rise to a viable legal claim. That risk often motivates employers to resolve the matter more generously to avoid litigation.
Do not try to make legal conclusions in your communication by asserting your stated facts demonstrate “race discrimination in violation of the FEHA,” or that the employer “is liable for punitive damages under the FEHA because of workplace harassment.” Instead, simply list out the facts that support your argument, and make the conclusion that the employer’s conduct was wrong without characterizing it in an outlandish manner.
If possible, try to include facts demonstrating that a senior corporate executive was involved in making the termination decision, but only if you have genuine information that points in that direction.
Avoid:
- Drawing attention to timing without connecting it to protected activity or a legal right
- Assuming suspicious timing alone proves retaliation without supporting facts
- Referencing personal milestones (e.g., birthdays, work anniversaries) that do not carry legal significance
- Using phrases like “it can’t be a coincidence” without tying the timing to a FEHA-protected action
Leverage Type #3: Reputational Risk or Confidential Information
Employees who hold public-facing roles, manage compliance issues, or have access to sensitive internal information may have additional leverage in severance negotiations. This is particularly true for senior employees, whistleblowers, or those in regulated industries such as healthcare, finance, or government contracting.
Effective example:
“Given my knowledge of the company’s internal compliance protocols—and the fact that I raised ethics concerns to senior leadership shortly before my departure—I believe it’s in everyone’s interest to resolve this matter privately and professionally.”
This type of leverage works because the potential for reputational harm or regulatory scrutiny can shift the employer’s risk assessment. Even if no wrongdoing occurred, the optics of a public dispute involving a knowledgeable former employee can raise concerns for leadership, investors, or regulatory bodies.
Avoid:
- Implying or suggesting that you will remain silent in exchange for money, which may come across as extortion.
- Overstating the sensitivity of your knowledge without evidence of actual risk
- Making vague references to “what you know” without specifics that would concern legal or compliance teams
- Positioning your departure as a threat to the company’s reputation instead of a mutual opportunity to resolve matters quietly
What Are the Least Effective Kinds of Leverage in Severance Negotiation?
Not all arguments carry weight in severance negotiations. Some approaches can weaken your position or cause the employer to disengage. The least effective forms of leverage often include:
- Vague claims of unfairness without reference to facts, timing, or legal concerns
- Emotional or angry communication, which can come across as unprofessional or reactive
- Lengthy, overly detailed or disorganized messages that obscure the key points
- Discrimination allegations unsupported by specific facts, documentation, witnesses, or a clear timeline
- Speculative claims, like asserting a layoff was pretextual without tying it to a protected activity or protected status
These tactics often lack the specificity, credibility, or legal relevance needed to shift the employer’s risk assessment. To be persuasive, leverage must be grounded in concrete facts and presented in a calm, focused, and strategic manner.
What Is the Best Way to Apply Leverage in Severance Negotiation?
The success of your severance negotiation often depends not just on what leverage you have, but on how you apply it. The most effective approach is professional, confident, evidence-based, and to the point. Generally speaking, shorter is better than longer. Below are key methods to follow, along with sample language for each:
Method #1: Be Professional and Confident
Maintain an even tone. Be assertive without being adversarial. Avoid emotional appeals or accusatory language.
Example:
“I want to resolve this matter amicably, but based on how the termination was handled, I believe there are legal concerns that warrant a second look at the severance offer.”
Method #2: Use an Active Voice and Avoid Equivocation
State your concerns directly. Avoid phrases like “I feel” or “it seems.” Rely on concrete observations, not speculation. Don’t suggest that the Employer might be correct, justified, or has a legitimate defense.
Example:
“I raised concerns about potential wage violations two weeks before I was terminated. That timing raises legal concerns under California law.”
Method #3: Explain the Legal Angle in Plain English
You don’t need to cite statutes. Instead, describe the issue in practical terms the employer will recognize as a legal risk.
Example:
“I had no prior discipline and was let go immediately after requesting medical leave. That raises concerns about whether the decision was based on my health status.”
Method #4: Be Evidence-Driven and Specific
Support your position with facts, dates, or documentation where possible. Stick to the timeline and key facts that create risk for the employer.
Example:
“My performance evaluations were consistently positive through Q2, and I received a bonus in June. The termination in July, after I reported compliance issues, suggests retaliation.”
Method #5: Be Concise and Direct
Avoid filler language or long narratives. Focus on the specific facts that matter and the outcome you seek. Don’t include facts or details that are not directly relevant, meaning essential for effective communication of your message.
Example:
“I believe the severance offer should be revisited in light of the potential risks outlined above. I remain open to a mutually-beneficial resolution.”
Method #6: Focus on Items the Employer Can Reasonably Revisit:
Not everything in a severance agreement is negotiable. The most effective leverage targets terms the employer has discretion to change, including the amount of severance pay, the duration of COBRA coverage, or the scope of non-disparagement and confidentiality provisions. Demanding unvested stock, fringe benefits, or perks like a company vehicle usually weakens your position, as these are often governed by strict policies or plan documents. A focused request that stays within the bounds of what the employer can realistically adjust is more likely to result in meaningful improvements to your severance package.
To learn how to turn this leverage into a compelling written request, see our guide: “How Do I Write a Severance Pay Demand Letter?”
For high-level executives, the stakes—and strategies—are different. Read: “Boost Your Executive Severance Pay: Demand Letter Tactics That Work”
Common Mistakes When Applying Leverage in Severance Negotiation
Employees often lose negotiating power by making preventable mistakes—many of which can be avoided with a more strategic approach.
Mistake #1: Vague, Non-Specific Claims of Unfairness
One of the most common errors is raising vague or general claims of unfairness. Simply saying that a termination felt wrong or unjust does not influence an employer’s risk analysis. Without specific facts, dates, or connections to protected legal rights, these claims are easily dismissed as subjective or emotional, rather than actionable.
Mistake #2: Overestimating the Value of Asserted Leverage
Employees frequently assume that any grievance—whether it involves mistreatment, poor communication, or workplace conflict—creates significant negotiating power. In reality, only well-supported legal or reputational risks create meaningful leverage. When employees overvalue weak claims, employers are less likely to take the negotiation seriously.
Mistake #3: Untimely Demand for Increased Severance
Timing matters. Waiting too long to raise concerns or request better terms—especially near the expiration of the review period—can undercut the strength of your position. If the demand feels like a last-minute tactic or is not based on new, compelling information, the employer may see it as opportunistic rather than credible.
Mistake #4: Unwarranted Direct Allegations of Illegality
Accusing an employer of unlawful conduct, such as discrimination or retaliation, is a serious step—and one that must be supported by evidence. When employees make these allegations without documentation or corroborating facts, it often damages credibility. Employers will assume the claim is unfounded, and it may cause them to disengage from the negotiation altogether.
Mistake #5: Bogus Threats of a Lawsuit
Threatening to sue without the intent or basis to follow through is one of the quickest ways to lose credibility. Employers and their legal counsel are skilled at recognizing when a threat is hollow. A fact-driven discussion of potential legal exposure is far more effective than an empty ultimatum.
The best severance negotiations are not emotional—they are strategic. Understanding how to assert leverage properly, and avoiding these common mistakes, greatly improves your chances of securing a better severance outcome.
Avoiding missteps is just as important as asserting your leverage—see: “How Do I Avoid Mistakes When Negotiating a Severance Agreement?”
FREQUENTLY ASKED QUESTIONS ABOUT LEVERAGE IN SEVERANCE NEGOTIATION
Is a severance agreement in California legally required?
No. In California, employers are not legally required to offer severance. However, when they do, it is always in exchange for a release of legal claims signed by the terminated employee. That’s why understanding and using your leverage is important before signing.
Can I negotiate the terms of my severance agreement even if the employer says it’s final?
Yes. Severance agreements are almost always negotiable, despite being presented as non-negotiable. If you raise valid legal or reputational concerns, employers may reconsider the terms to avoid risk.
What kinds of legal issues give me leverage in a severance negotiation?
Potential claims of discrimination, retaliation, unpaid wages or commissions, or whistleblower retaliation can provide strong leverage. These raise risks for the employer that can justify increasing the severance offer.
Should I threaten to sue if I want a better severance package?
No. It’s better to raise your concerns professionally and factually, without direct threats. Presenting a clear, evidence-based explanation of your concerns is more effective than ultimatums.
Do I need an attorney to negotiate my severance agreement?
While not legally required, consulting an employment attorney can be helpful—especially if you believe you have leverage. An attorney can assess your legal position and communicate with the employer strategically.
What if I’ve already signed the severance agreement—can I still negotiate?
Generally, no. Once you sign a severance agreement and release your claims, you lose the right to negotiate further. That’s why it’s critical to evaluate your leverage and consult an attorney before signing.
Conclusion
Severance negotiations are often your last opportunity to secure fair compensation and protect your legal rights before your employment relationship ends. Understanding what leverage means—and how to apply it effectively—can shift the balance of power in your favor. Not every termination gives rise to legal risk, but when it does, the ability to identify and communicate that risk calmly, clearly, and professionally can lead to a significantly improved outcome.
The most effective severance negotiations are not about confrontation—they’re about strategy. By focusing on credible legal or reputational risks, avoiding common mistakes, and presenting your position with confidence and precision, you give yourself the best chance to reach a resolution that respects your contributions and safeguards your future.
Contact the Ruggles Law Firm at 916-758-8058 to Evaluate Your Potential Lawsuit
Before you sign anything, take time to assess your leverage. If you’re unsure where you stand, contact the Ruggles Law Firm at 916-758-8058 for a free, no-obligation consultation. We’ll help you evaluate your potential claim and negotiate from a position of strength.
Matt Ruggles has a thorough understanding of California employment laws and decades of practical experience litigating employment law claims in California state and federal courts. Using all of his knowledge and experience, Matt and his team can quickly evaluate your potential claim and give you realistic advice on what you can expect if you sue your former employer.
Blog posts are not legal advice and are for information purposes only. Contact the Ruggles Law Firm for consideration of your individual circumstances.
