When you’re negotiating a California executive severance package, the demand letter is often the turning point. It’s not just a letter, it’s the foundation of your leverage. A well-crafted severance pay demand letter sets the tone for the entire negotiation, frames your strongest legal claims, and forces the company to evaluate the true legal and reputational risks of refusing to settle. But doing this right requires far more than listing grievances or asking for a higher payout. It demands strategy, timing, and a clear understanding of how employers calculate risk when dealing with high-level departures.
I’m Matt Ruggles, and I’ve been practicing employment law in California for more than 30 years. During that time, I’ve helped executives in finance, technology, healthcare, entertainment, biotech, energy, consulting, and multinational corporations negotiate powerful exit packages by using strategic demand letters that speak the employer’s legal and financial language. I wrote this blog to explain why the demand letter is the most critical tool in executive severance negotiations and how to structure it to maximize payout, protect your career image, and apply pressure in a way that moves employers to the table.
In this guide, I’ll walk you through the five most effective demand letter tactics that consistently boost executive severance pay, including how to select your strongest claims, calculate a realistic demand, and apply pressure that drives results without burning bridges.
5 Effective Severance Pay Demand Letter Tactics to Boost Severance Pay in California
If you keep reading, I’ll walk you through the five specific demand letter tactics I consider essential for crafting a letter that not only gets attention, but increases your severance payout and strengthens your overall negotiating position.
If you’re holding a severance offer and you’re not sure whether to sign it or fight for more, don’t guess. Call the Ruggles Law Firm at 916-758-8058. I’ll tell you whether it’s a good deal or if your employer is lowballing you.
To learn how employment lawyers think when negotiating severance, read my blog, How to Negotiate Severance Like an Employment Lawyer
Demand Letter Tactic #1: Use Strong Legal Claims to Gain Leverage
When an executive is terminated and offered a severance package, acting quickly is essential. Employers expect negotiations to move swiftly, and delays can weaken an executive’s bargaining position. The most effective strategy is to assert leverage immediately by presenting strong legal claims backed by a credible threat of litigation.
Companies assess severance demands by weighing the cost of offering a higher payout against the financial and reputational risks of a lawsuit. A well-documented claim, such as wrongful termination, breach of contract, or retaliation, can expose an employer to significant liability, legal expenses, and prolonged disputes. Beyond direct costs, litigation can generate negative publicity, strain business relationships, and attract regulatory scrutiny. To avoid these risks, employers often prefer to negotiate an enhanced severance package rather than engage in costly legal battles.
A common mistake is overloading a demand letter with a laundry list of claims, hoping that quantity will create more pressure. In reality, this approach weakens the letter’s impact, as weaker claims dilute the credibility of stronger ones. The most effective tactic is to focus on one or two of the most compelling claims that pose the greatest legal and financial risk to the employer. A precise, well-supported demand will carry more weight and significantly improve an executive’s leverage in severance negotiations.
The following claims are particularly effective in severance negotiations:
- Wrongful termination including discrimination and retaliation: If an executive can demonstrate that their termination was linked to whistleblowing or discrimination, they may have a strong basis for an enhanced severance package.
- Contractual breaches: Executives often have employment contracts, and any violations—such as termination without cause or failure to pay earned bonuses—should be highlighted.
In California, claims such as wrongful termination, discrimination, and retaliation are governed by the Fair Employment and Housing Act (FEHA). The California Civil Rights Department (CRD), previously known as the Department of Fair Employment and Housing (DFEH), enforces these protections and investigates violations involving workplace discrimination and retaliation. Including FEHA-based claims in a severance pay demand letter signals that the employer may face regulatory scrutiny, civil penalties, and litigation risk if they refuse to resolve the matter.
To understand the legal protections that support many severance pay demand letter claims, read my blog, FEHA: How It Protects California Employees
If you want to know what makes an employment lawsuit credible, and how those elements impact severance negotiations, read my blog, Twelve Elements of a Strong Employment Lawsuit in California
Demand Letter Tactic #2: How to Calculate a Realistic Executive Severance Pay Demand
An effective demand letter must include a well-calculated and realistic severance demand. Asking for an excessive amount does not “leave room to negotiate”—it signals to the employer that you are unreasonable and that negotiating is a waste of time. If the demand exceeds the company’s expected cost of defending a lawsuit, they may decide it’s easier to hand the matter over to their legal team and fight rather than settle.
A well-calculated demand should be high enough to reflect your true financial losses and the employer’s risk but reasonable enough to keep them at the table. Remember, you will not receive your full demand amount, and as in any negotiation, success is measured by securing more than the initial offer.
Executives should calculate their severance demand using the following factors:
- Comparable Litigation Costs: Research typical attorney fees and defense costs for similar employment lawsuits. In many cases, an employer will weigh whether settling for six to twelve months of pay is cheaper than a protracted legal battle. If your demand far exceeds what they would spend to defend the case, they are more likely to fight rather than settle.
- Industry Norms for Severance Packages: Consider standard severance terms for executives in your industry. While senior executives in some industries may negotiate two to twelve months of compensation, demanding multiple years of pay is rarely reasonable unless you have a unique long-term employment history or contractual entitlements.
- Lost Compensation: Start with what you would have reasonably earned had you remained employed, including salary, bonuses, commissions, and stock that was scheduled to vest in the near future. Avoid inflating numbers with speculative future earnings—courts and employers rarely honor demands based on earnings far beyond the termination date.
- Length of Employment and Contractual Rights: Long-tenured employees or those with written contracts may have stronger claims to extended severance. If your employment agreement or company policies reference severance formulas, use those as a starting point rather than making arbitrary demands.
- Leverage from Employer Risk: If your termination raises potential legal claims such as wrongful termination, retaliation, or discrimination, the employer may be willing to pay more to avoid litigation. However, your demand should still align with the employer’s risk assessment rather than assume a worst-case scenario payout.
For a breakdown of how severance pay is typically calculated and how to assess your number, read my blog, Severance Pay Demand: How to Calculate Effectively
If your employer expects you to accept their first offer without questions, they’re counting on you not knowing your leverage. Contact me at 916-758-8058, and I’ll evaluate whether you’re leaving serious severance pay on the table.
Demand Letter Tactic #3: Know What Terms Can Be Negotiated to Boost Severance Pay
When negotiating severance, executives should prioritize securing the highest possible lump-sum payout rather than getting sidetracked by individual benefits like lost vacation time, unused leave, or company perks such as a vehicle or expense account. These minor elements rarely add meaningful value and can weaken overall negotiation leverage.
Likely to Be Successfully Negotiated
- Severance Payment: The core focus of negotiations, severance pay can often be increased, particularly if the executive has strong legal claims or the employer wants to avoid litigation.
- Non-Disparagement & Confidentiality: Employers may agree to modify these provisions, such as making them mutual or paying additional severance in exchange for stricter terms.
- References & Transition Support: A neutral or favorable reference, career transition services, or extended healthcare coverage can often be negotiated to ease the executive’s transition.
Unlikely to Be Successfully Negotiated
- Unvested RSUs & Stock Options: Most equity plans require continuous employment through the vesting date, meaning unvested stock is typically forfeited upon termination. Companies rarely make exceptions unless explicitly outlined in an employment agreement.
- Company Perks & Fringe Benefits: Items like expense accounts, car allowances, and club memberships are usually discontinued immediately upon termination and are not a priority in severance negotiations.
- Accrued Vacation & Leave Balances: Many employers follow strict policies regarding the payout of unused vacation or leave, leaving little room for negotiation.
By concentrating on the most negotiable aspects of severance in the demand letter, executives can maximize financial security and ensure a smoother transition to their next opportunity.
For a deeper dive into the essential components of executive severance negotiations, read my blog, How to Negotiate Executive Severance Agreement Terms
If you want to know which agreement clauses are designed to trap you, read my blog, Top 10 Things to Look Out For in a Severance Agreement
Demand Letter Tactic #4: How to Structure the Letter to Maximize Leverage
The structure of a demand letter is just as important as its content. A poorly organized, overly detailed, or emotionally charged letter can weaken your position and make it easier for the employer to dismiss your claims. The goal is to create a letter that is clear, direct, and strategically framed to compel the company to negotiate rather than ignore or fight back.
A well-structured letter presents the strongest claims upfront, provides just enough supporting evidence to establish credibility, and maintains a professional tone that keeps the employer engaged. The following key elements will help maximize the effectiveness of your demand letter:
Key Structural Elements of an Effective Demand Letter
- State the strongest claims upfront: Lead with your most compelling legal claims, such as wrongful termination, breach of contract, or retaliation. Avoid listing every possible claim—weak or speculative arguments dilute your position and distract from your strongest leverage points.
- Provide enough evidence to show you are not bluffing, but not so much that the company can investigate and undermine your claims: Offer key details that demonstrate financial loss and legal exposure, but avoid over-disclosing facts that allow the employer to take corrective action before negotiations begin.
- Reference broad legal statutes, but verify they align with your claims: Citing general, well-established laws like anti-retaliation or discrimination statutes can add credibility, but ensure they are directly relevant to your claims. Incorrect or overly technical references can weaken your position and signal a lack of legal understanding.
- Keep it concise, preferably two pages or less: A demand letter is not a courtroom brief, a personal manifesto, or a dramatic retelling of workplace grievances. A long-winded, emotionally charged diatribe will not be taken seriously. The longer the letter, the more likely key points will be ignored, buried under unnecessary detail. Decision-makers are busy – if they have to sift through pages of complaints, they may dismiss the letter outright. A sharp, well-structured letter gets read, absorbed, and taken seriously.
- Use a firm yet cooperative tone: A confrontational or overly aggressive approach can lead to immediate rejection. Instead, a confident, professional, and solution-oriented tone encourages meaningful negotiations.
To better understand how leverage drives severance outcomes, read my blog, How To Use Leverage in Severance Negotiation
Demand Letter Tactic #5: How to Apply Pressure During the Negotiation
To maintain momentum and maximize leverage, executives must apply strategic pressure throughout severance negotiations, especially in the severance pay demand letter. A weak or overly cautious approach signals to the employer that they control the process. Instead, executives should make it clear that they take their legal rights seriously and are prepared to escalate if necessary.
Key Pressure Points for Effective Negotiation
- Reject the initial severance offer outright: Unless the offer is unusually generous, executives should not entertain the first offer. Clearly rejecting it forces the employer to reconsider their position and propose a better deal.
- Emphasize litigation risks without ambiguity: Avoid vague references. Make it clear that the company faces real exposure if the matter escalates. This may include legal violations, financial liability, and potential regulatory scrutiny.
- Leverage reputational concerns: Companies, especially in high-profile industries, are sensitive to executive departures and potential negative press. Highlighting the risks of a contentious dispute can push an employer toward settlement.
- Set a firm response deadline: Open-ended negotiations allow employers to stall or ignore the demand. A clear deadline keeps negotiations moving and signals that the executive is serious.
- Work with an experienced employment litigator: Companies take demands more seriously when they come from attorneys with a long track record of employment litigation. A credible legal advocate increases pressure and discourages lowball offers.
To avoid costly errors that weaken your negotiating position, read my blog, How Do I Avoid Mistakes When Negotiating a Severance Agreement?
If you’re unsure which lawyer should write or negotiate your severance pay demand letter, read my blog, How Do I Select a California Employment Lawyer?
Severance Pay Demand Letter: Frequently Asked Questions from California Executives
What is a severance pay demand letter, and when should an executive use one?
A severance pay demand letter is a formal written request outlining the legal and financial reasons an executive is entitled to enhanced severance compensation. It’s typically used after termination or when a severance offer is too low and the employee wants to negotiate a stronger exit package without immediately filing a lawsuit.
How can a severance pay demand letter help boost my executive severance package?
A well-crafted executive severance pay demand letter highlights legal exposure, financial loss, and reputational risks for the employer. When the company understands the cost of litigation or negative publicity, they are more likely to increase severance pay to settle quickly and quietly.
What legal claims should be included in an executive severance pay demand letter?
The strongest severance pay demand letters focus on one or two credible legal claims, such as wrongful termination, retaliation, discrimination, or breach of contract. Including too many weak claims can reduce leverage and make the letter look unfocused or desperate.
How do I calculate the right number to request in a severance pay demand letter?
An effective severance pay demand should be based on lost wages, bonuses, commissions, stock vesting timelines, industry norms for executive severance, and projected litigation costs for the employer. The number should be high enough to reflect your value but realistic enough to keep the company engaged in negotiation.
Can I negotiate stock options or equity in a severance demand letter?
Unvested RSUs and stock options are typically forfeited upon termination unless your contract states otherwise. However, equity can sometimes be used as part of a settlement negotiation if your severance pay demand letter shows that the employer risks greater loss through litigation or public scrutiny.
Should I write my own severance pay demand letter or hire an employment lawyer?
Executives who represent themselves often receive lowball offers or get ignored entirely. A demand letter from an experienced employment litigator signals serious legal risk to the employer and significantly increases the chances of securing a stronger executive severance payout.
What mistakes should I avoid when drafting a demand letter?
Common mistakes include making an inflated demand with no legal basis, writing an overly emotional or accusatory narrative, listing every possible complaint, or failing to set a response deadline. These errors weaken credibility and reduce negotiation leverage.
What happens after I send a severance pay demand letter to my employer?
Once a severance demand letter is sent, the employer will typically involve their legal counsel and respond with either a revised offer, a request for more information, or a denial. A strategic letter often opens the door to negotiation, mediation, or a structured exit agreement without immediately filing a lawsuit.
Still holding a severance offer and unsure if it’s fair? I’ll tell you whether to push back or take the deal if you call 916-758-8058 today.
Conclusion: How a Strong Severance Pay Demand Letter Can Boost Executive Severance Pay
The goal of severance negotiation is not just increased compensation but a comprehensive exit strategy that protects an executive’s financial and professional future. By crafting a compelling demand letter using the above tactics that highlight legal claims, financial losses, and employer exposure, executives can significantly improve their severance outcomes.
Contact the Ruggles Law Firm at 916-758-8058 to Evaluate Your Potential Lawsuit
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.
Contact the Ruggles Law Firm at 916-758-8058 for a free, no obligation consultation.
Blog posts are not legal advice and are for information purposes only. Contact the Ruggles Law Firm for consideration of your individual circumstances.
