Read This Blog by Matt Ruggles to Learn Effective Severance Agreement Negotiation Skills
For many California employees, being presented with a severance agreement is unexpected and confusing. Effective severance agreement negotiation is not a skill most employees possess. Unlike other employment documents, severance agreements, by their nature, always come at a pivotal and often emotional moment: when your employment is ending. Most of the time, it’s not always clear how to approach or maximize the severance offer. You may find yourself wondering: Should I take the money? What rights am I waiving? How do I know if the offer is fair or if I can negotiate for better terms?
Severance agreements often are proposed when an employer wants to terminate an employee quickly and quietly, usually because the employer doesn’t have a sufficient reason to justify an involuntary termination (i.e. the company knows it doesn’t have a legitimate reason (or enough of a reason) to fire the employee). As a result, employees offered a severance agreement should not always agree to the initial offer without question – severance offers rarely are made on a “take it or leave it” basis, especially when only one employee is being terminated. In order to successfully negotiate an improvement in the terms or payment in a severance agreement, employees should know how to identify sources of leverage, build a strong case for their additional “ask,” and how to negotiate strategically in order to make a significant favorable improvement to the severance agreement.
Whether you’re evaluating an initial severance offer, preparing to engage with your employer, or looking to maximize your outcome/severance payment, this guide will give you the tools to confidently assert your rights and negotiate a severance agreement to maximize the outcome.
Section 1: Understand Your Leverage for Effective Severance Agreement Negotiation
Establish what facts or circumstances give you an advantage in the negotiation before you engage. Consider what facts or circumstances are particularly favorable for you. Also consider what facts or circumstances make the employer particularly vulnerable to potential public embarrassment or legal liability.
Assess Potential Legal Claims for Leverage Against Your Employer
- If you’ve been offered a severance agreement, it likely means your employer wants to end the employment relationship but does not have a strong or lawful reason to do so. This puts the employer in an untenable position. Employers often propose severance agreements to avoid the risk of potential disputes or litigation, making the employer’s desire to resolve the situation quickly and quietly a key source of leverage for you.
That said, do not overstate your potential legal claims when negotiating with your employer, and do not threaten a “class action” for one thing or another. An employer is much more likely to consider reasoned, measured discussion of potential legal claims compared to outlandish, off-the-wall and hyperbolic descriptions of what you think you can do to the employer in court.
- If you believe the employer’s reasoning for termination is unfair, unfounded, or questionable under the law, you can use this as an opportunity to negotiate better terms. However, it is often wise to keep your claims vague rather than specific during the negotiation process. By hinting at potential legal issues—such as wrongful termination, discrimination, harassment, retaliation, or unpaid wages—without fully detailing the specifics, you leave the employer uncertain about the exact nature or strength of your claims. This strategic ambiguity can increase their anxiety about what might surface if negotiations break down, motivating them to offer more favorable severance terms to avoid further risk.
On the other hand, if you provide a detailed, point-by-point description of everything that was wrong or unfair in the workplace, the employer will conclude that you are offering a mountain of irrelevant facts because you don’t have any relevant facts that demonstrate potential liability. Here’s why: most employees that write a detailed, point-by-point written complaint to the employer wind up submitting a long-winded, rambling, confused and unorganized mess of information. Most employees submit this wrong-headed document because most employees are not trained in the law, and do not understand the legal or factual elements of a claim for discrimination, harassment or retaliation, and instead just list every single thing he or she can think of. The employer reads it and always concludes the same thing: this employee is just a complainer and doesn’t have any real claims because there is so much irrelevant, off-point material it’s almost impossible to understand the main points of the employee’s written complaint. Matt’s advice to employees is that this sort of response is rarely, if ever, appropriate, useful or wise.
- Keeping your claims vague does not mean fabricating or exaggerating concerns. Rather, it means tactfully communicating that you are aware of your rights and that you have concerns about the employer’s actions. This approach allows you to retain control of the narrative while ensuring the employer takes the negotiation seriously.
- If you have evidence of credible employment claims, such as emails, performance reviews, or witness accounts, these can significantly bolster your position. However, even then, it is often better to reveal the strength of your claims gradually—through professional, measured negotiation—rather than laying all your cards on the table upfront. This calculated approach creates leverage and keeps the employer motivated to settle on terms favorable to you.
For instance, if you have ten (10) different handwritten letters that you allege show inappropriate sexual harassment from your direct supervisor who was constantly harassing you, do not tell the employer that you have ten letters and disclose them all to the employer as part of the negotiation. Give the employer the two very worst letters, and tell the employer “I have nearly ten more just like it.” Matt explains it this way: describe your own behavior is the best possible terms that are credible and true; describe the employer’s actions and alleged motivation in the worst possible way that is credible and true.
Assess Other Sources of Leverage for Effective Severance Agreement Negotiation
- Length of Employment: Your tenure with the company matters. Long-term employees often have deep knowledge of the organization, its culture, and its operations. The disruption caused by your departure can increase your bargaining power.
- Knowledge of Sensitive Information
If you possess sensitive or confidential information about your employer, such as trade secrets, internal financial data, proprietary processes, or insider knowledge of company practices, this can serve as a powerful negotiating tool in severance discussions. Employers are often motivated to ensure this information remains protected and out of public or legal scrutiny, which can give you significant leverage during negotiations.
The key to using this strategy effectively lies in how you communicate your knowledge. Rather than explicitly stating or threatening to disclose sensitive information (which would be improper and potentially illegal), you should make it subtly clear that you are aware of certain aspects of the company’s operations, decisions, or vulnerabilities.
This vague but credible acknowledgment signals to the employer that you have information they likely want to keep private, yet you are not being overtly adversarial or threatening. Employers will often prioritize negotiating a favorable and amicable severance agreement to avoid any possibility of sensitive information becoming part of legal proceedings or public discussions.
- Corporate Reputation and Public Relations: Employers are often motivated to avoid negative publicity. If your departure is contentious, high-profile, or could damage the company’s image, they may be eager to settle amicably.
Section 2: Building and Presenting Your Case During Severance Agreement Negotiation
Prepare a strong set of facts and documents to support you negotiation and demonstrate your seriousness.
Build and Present a Strong Case
- Document Everything: Compile detailed records of your performance, achievements, and workplace issues, including emails, performance reviews, or any incidents of discrimination, harassment, or retaliation. A well-documented record lends credibility and puts you in a stronger position.
In most circumstances, documents should be organized chronologically by subject. It is important to not make marks, notes, highlights, or any other modification to any document that you intend to present as part of your negotiation. If you need to make notes on a document, make copies and use the copy, but always keep a clean set of original documents.
- Highlight the Employer’s Risk: Clearly articulate how your potential legal claims could expose the employer to financial, legal, or reputational harm. For example, if you were wrongfully terminated or experienced retaliation, explain how pursuing such claims could cost them more in the long run. Employers are often more inclined to improve severance offers when presented with credible risks. Overstated, outlandish and wild accusations and demands rarely get the same consideration, and more likely to get ignored.
Example of Subtle Wording:
If the initial severance offer does not reflect the value of your claims or concerns, you could express the following sentiment, supported by your own individual set of facts and circumstances. In other words, it is most effective to generally identify the “circumstances surrounding your departure” and the “potential issues that could raise legal and reputational risks” referenced in the sample language below:
“I appreciate the company’s efforts to provide a severance offer, and I want to resolve this matter amicably. However, based on my understanding of the circumstances surrounding my departure, there are potential issues that could raise legal and reputational risks if left unresolved. I believe reaching a mutually fair agreement now would be in both our best interests and allow us to move forward constructively.”
Signal Readiness to Escalate
- Demonstrate Willingness to Pursue Claims: While negotiating a severance agreement, it is important to communicate your awareness of your legal rights and your willingness to take further action if necessary. This strategy, when executed professionally and without being combative, can signal to your employer that you are serious, confident, and prepared to escalate the matter if a fair resolution is not reached. Here’s how and why this approach works:
Why This Strategy is Effective
Encourages Quick Resolution: Employers typically seek to avoid the time, costs, and uncertainties of litigation. By subtly signaling your readiness to escalate matters, you place pressure on the employer to resolve the negotiation promptly and amicably rather than risking legal exposure.
Highlights Employer Risk: Even without explicitly threatening legal action, raising your awareness of legal claims forces the employer to consider the potential consequences of failing to reach an agreement. For example, litigation could expose their company to financial damages, legal fees, and reputational harm, making a negotiated severance agreement the safer, more cost-effective option.
Positions You as a Serious Negotiator: Employers are more likely to take your demands seriously when they understand you are informed about your rights and prepared to act. Being assertive (without being adversarial) demonstrates confidence and shows the employer that you will not accept an inadequate severance offer.
Example of Subtle Wording:
If your employer presents an initial severance offer that seems inadequate, you might say:
“I appreciate the offer and want to resolve this fairly for both sides. However, considering my knowledge of the circumstances surrounding my termination and my rights under California employment laws, I believe there are outstanding concerns that need to be addressed. I’m confident we can find a resolution that works for everyone, but I’m also prepared to explore all of my options if necessary.”
As mentioned above, it is most effective when you identify the “California employment laws” that potentially would be implicated, rather than just refer to California law generally.
- Engage Legal Counsel Early: Consulting an experienced employment attorney signals that you’re serious about the negotiation. Employers are more likely to offer better terms when they know you have professional representation advocating on your behalf.
Section 3: Strategic Engagement for a Successful Negotiation
Approach the negotiation strategically, at the right time and with the right people.
Timing the Discussion
- Choose Strategic Timing: If you suspect termination is imminent, raise concerns—such as discrimination, harassment, or retaliation—before the employer initiates the conversation. By doing so, you make it harder for them to justify their decision without offering a severance agreement. Raising complaints after you are informed of the termination decision is completely ineffective and will do nothing to delay or postpone your termination.
- Capitalize on Employer Deadlines: Be mindful of the employer’s timing pressures. Deadlines like end-of-quarter budgets, reorganizations, or leadership changes can make employers more eager to resolve matters quickly and on favorable terms for you.
Engage the Right Decision-Makers at the Right Time
When negotiating a severance agreement, it is critical to engage the appropriate people who have the authority to resolve the matter effectively.
- Bypass Local Management or Immediate Supervisors: Your local supervisors or HR representatives often lack the discretion and decision-making authority to negotiate meaningful severance terms. Additionally, they may focus on defending the company’s position rather than addressing your concerns. Starting the process with them can result in delays or unproductive conversations.
- Engage Senior Management or the Employer’s Legal Department: Instead, escalate your discussions to upper management, senior leadership, or the company’s legal team. These individuals are more likely to understand the broader risks of your claims, the sensitivity of the information you hold, and the need for a swift, amicable resolution. Senior decision-makers typically have the authority and flexibility to agree to more favorable severance terms.
By strategically bypassing lower management and focusing on senior leadership or legal representatives, you ensure that your negotiation reaches the individuals who can assess risks and make decisive, meaningful offers.
Section 4: Always Negotiate Severance Agreement Terms Professionally
Secure the best possible terms while maintaining professionalism and controlling the process. (Read this blog by Matt Ruggles to understand common terms found in severance agreements.)
Negotiate Non-Cash Benefits That Add Value
- Higher Severance Pay Multiples: Push for higher severance payments based on your tenure, performance, and the company’s severance policies. For instance, negotiate for additional weeks of pay per year of service or for your significant contributions.
- Retention Pay for Transition: If your employer needs you to stay on during a transition period, request additional compensation or benefits in exchange for your cooperation. This ensures you’re fairly compensated for helping the company through the process.
Stay Professional to Maintain Leverage
- Avoid Burned Bridges
Maintaining a professional demeanor throughout severance negotiations is essential for protecting your leverage and securing the best possible terms. While it may be tempting to let emotions drive the conversation—especially if you feel wronged or mistreated—it is far more effective to remain calm, cooperative, and measured. Here’s why:
Professionalism Builds Trust and Goodwill: Employers are more likely to negotiate fairly and offer favorable terms when they perceive you as reasonable, cooperative, and professional. Demonstrating that you are focused on resolving the matter amicably can encourage them to view you as a partner in the process rather than an adversary, making them more inclined to meet your requests.
Avoid Escalation: Adopting a confrontational or adversarial tone can quickly escalate the situation, making the employer less willing to compromise. If they feel attacked or threatened, they may entrench, resist negotiation, or take a defensive stance, which could result in a less favorable severance offer or even no offer at all. Staying professional keeps the conversation productive and solutions oriented.
Protect Your Reputation: How you conduct yourself during this process can impact your professional reputation, especially if you work in a specialized industry or a close-knit professional community. Employers often share information informally, and a professional approach ensures that you leave on good terms, with your reputation intact. Burning bridges may limit future opportunities, such as references, rehiring possibilities, or professional connections.
Keep Control of the Narrative: Maintaining professionalism gives you the ability to control the narrative surrounding your departure. By framing yourself as a valued employee seeking an amicable resolution, you position yourself in a way that can be advantageous for future opportunities. For example, this allows you to explain your departure to prospective employers as a mutual decision rather than a contentious one.
Focus the Employer on Resolution: A calm, professional tone allows the employer to concentrate on resolving the matter quickly rather than managing unnecessary conflict. Employers often prefer to avoid drawn-out, contentious disputes, and a professional approach makes it easier for them to justify offering better terms to move forward.
Contact the Ruggles Law Firm at 916-758-8058 to Evaluate Your Potential Severance Agreement
Contact the Ruggles Law Firm at 916-758-8058 to Evaluate Your Potential Severance Agreement.
Matt Ruggles has a thorough understanding of California severance agreements 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 severance agreement or potential claim and give you realistic advice to help you understand where you stand.
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.
