Most California employees hear the same script when they are laid off or terminated:
“This is our standard severance.”
“It’s not negotiable.”
“This is the best we can do.”
Sometimes that is true. More often, it is positioning.
In California, there is generally no legal requirement that an employer offer a terminated employee severance. When severance is offered, it is almost always because the employer wants something in return. In most cases, that something is a broad release of legal claims. The more valuable that release is to the employer, the more legal leverage the employee may have to negotiate a bigger severance package in California. Severance negotiations are not about fairness or loyalty. They are about risk, and risk is where leverage comes from.
Understanding when you have legal leverage in a California severance negotiation is often the key to successfully increasing a severance offer before you sign anything.
I’m Matt Ruggles, and I’ve been practicing employment law in California for more than 30 years. Over the course of my career, I have been involved in thousands of severance negotiations. I spent decades representing employers as a defense lawyer, and I now exclusively represent employees throughout California. That experience gives me a clear understanding of how employers evaluate severance risk, when they are willing to increase an offer, and when they are not.
I wrote this article to explain when California employees have legal leverage for a bigger severance package, how that leverage actually works in real situations, and the common mistakes that quietly reduce bargaining power before negotiations ever begin. If you are reviewing a severance offer and wondering whether you have leverage to negotiate more, this guide is designed to help you understand the answer before you sign anything.
If you want to learn how to push for a better severance outcome, read my detailed explanation: How to Maximize Your Severance Offer in California.
What Severance Really Is in California and How It Affects Severance Negotiations
Severance is not a reward for loyalty. It is not a courtesy. And it is not a reflection of how hard you worked or how long you stayed.
In California, severance is a risk-management tool. Employers offer severance because they want certainty. Specifically, they want to reduce exposure to potential legal claims such as discrimination, retaliation, unpaid wages, or wrongful termination. Severance exists to “buy peace,” not to say thank you.
The size of a severance offer is rarely accidental. It is driven by the employer’s assessment of risk. When an employer believes there is little legal exposure, severance offers tend to be modest or nonexistent. When the employer sees credible legal risk, severance offers increase accordingly.
This is why severance negotiations in California do not turn on fairness. They turn on leverage.
Leverage comes from facts that create legal exposure. That exposure may involve protected activity, timing issues, documentation gaps, compensation disputes, or the scope of the release the employer wants you to sign. Employers evaluate those factors quietly and quickly, often before the severance offer is even presented.
The pattern is consistent across thousands of negotiations:
No leverage usually means a small severance offer.
More leverage usually leads to a bigger severance package.
That principle appears repeatedly in California severance disputes, whether the issue involves FEHA claims, retaliation concerns, wage and hour exposure, or disputes over commissions, bonuses, or equity. Employers do not increase severance because an employee asks nicely. They increase severance because paying more is cheaper than litigating risk.
Understanding this distinction is critical. Employees who view severance as a personal judgment often negotiate emotionally and weaken their position. Employees who understand that severance is a business decision driven by legal exposure negotiate from strength.
If you’ve just been fired and don’t know what to do next, read my post: I Just Got Fired: What Should I Do Right Away?
If you are reviewing a severance offer and trying to determine whether you have legal leverage for a bigger severance package in California, it is worth getting that question answered early. You can call me at the Ruggles Law Firm at 916-758-8058 to evaluate your situation before you sign anything.
Five Categories of Legal Leverage to Negotiate a Bigger Severance Package in California
Below are the five most common sources of legal leverage California employees may have when negotiating severance, with examples drawn from the types of cases employers worry about most.
Category #1: Legal Claims That Create Leverage to Negotiate a Bigger Severance in California
Potential legal claims are often the most powerful source of leverage in a California severance negotiation. Among those, claims arising under California’s Fair Employment and Housing Act (FEHA) routinely carry the greatest weight.
The FEHA is California’s primary civil rights statute governing the workplace. It prohibits discrimination, harassment, and retaliation based on protected characteristics, and it imposes strict duties on employers once an employee engages in protected activity. Employers are acutely aware of FEHA exposure because these claims are fact-intensive, jury-driven, and expensive to defend.
At the severance stage, an employee does not need to prove a FEHA violation. The issue is whether the facts raise plausible exposure. If they do, the employer has risk, and severance exists to manage that risk.
Common FEHA-based leverage scenarios include:
- Retaliation after complaining about discrimination, harassment, or unsafe working conditions
- Termination shortly after requesting medical leave, pregnancy leave, or a disability accommodation
- Discipline or termination following a request for accommodation or an interactive process breakdown
- Disparate treatment where similarly situated employees outside a protected class were treated more favorably
In addition to the FEHA, other California statutes frequently create severance leverage when termination follows protected conduct or broken promises. These include:
- California Labor Code section 1102.5, which protects employees from retaliation for reporting unlawful conduct or refusing to participate in illegal activity
- Promissory fraud, where an employer induces continued employment or action through promises it never intended to keep
- Wage-and-hour statutes involving unpaid wages, commissions, or misclassification, which often intersect with retaliation claims
What matters at this stage is not whether the employee can immediately prove a violation. There is no burden of proof in a severance negotiation. The claim only needs to be credible enough that the employer prefers certainty over litigation risk.
This point is often misunderstood. Employees sometimes assume that if they cannot definitively prove discrimination or retaliation, they have no leverage. That is incorrect. Employers routinely pay severance to eliminate claims that are unproven but plausible, because FEHA and retaliation cases are unpredictable, fact-driven, and costly even when the employer believes it will ultimately prevail.
Matt’s Legal Perspective:
FEHA claims drive severance leverage because juries decide them, timelines matter, and employers rarely control how the facts will be perceived once litigation starts.
If you’re curious why wrongful termination lawsuits under the FEHA often backfire on employers, read my blog: Wrongful Termination Lawsuits Under the FEHA: A Costly Gamble for Employers.
Category #2: Termination Timing Issues That Increase Severance Negotiation Leverage
Even a termination that may be lawful on its face can create legal leverage if it is handled poorly. In California severance negotiations, timing often matters as much as the underlying reason for termination.
Employers frequently undermine their own position through bad timing, weak documentation, or inconsistent explanations. Those missteps create uncertainty, and uncertainty increases risk. That risk is what severance is designed to address.
Common examples include:
- A performance-based termination with no prior written warnings or discipline
- A layoff announced shortly after an employee complained to HR
- A termination during or immediately after protected medical, pregnancy, or family leave
- Shifting or inconsistent reasons for termination between meetings, emails, or separation documents
Courts and juries in California pay close attention to timing. A termination that closely follows protected activity, leave, or complaints often looks retaliatory, even if the employer believes it had a legitimate reason. Employers know this, and it directly affects how much they are willing to pay for a release of claims.
This is why timing issues frequently increase severance leverage. An employer may feel confident about its ultimate defense but still choose to pay more severance to avoid explaining bad timing to a jury.
Matt’s Legal Perspective:
Good facts age well. Bad timing never does.
If you’re curious about how successful severance negotiations actually unfold, read my blog: Examples of Successful Severance Negotiation.
Category #3: Broad Release Terms That Increase Severance Pay in California
Many California severance agreements ask for far more than a simple release of legal claims. The broader the protections an employer demands, the more valuable the agreement becomes to the employer and the more legal leverage the employee may have in negotiating severance.
Separation agreements often include restrictions that go well beyond ending a potential lawsuit. These provisions are designed to limit what the employee can say, do, or participate in long after employment ends.
Common provisions include:
- Broad releases covering both known and unknown claims
- Confidentiality and non-disparagement clauses
- Post-termination cooperation obligations
- Waivers of PAGA claims, sometimes drafted improperly or overbroad
Each additional restriction increases the value of what the employee is giving up. A release that extinguishes wage claims, silences the employee, and limits future participation in investigations is not a routine request. It is a risk-management strategy, and employers expect to pay for it.
Real-world example:
An employee with potential wage and hour or PAGA exposure is asked to release all claims, remain silent, and waive statutory penalties. That is not a “standard” severance agreement. It carries real value to the employer and often supports a higher severance demand.
Employers understand that the broader the release, the harder it would be to defend if challenged. That understanding often translates into increased severance when the issue is raised strategically.
Matt’s Legal Perspective:
The broader the silence they want, the more they should expect to pay for it.
If you are unsure whether your severance offer reflects the actual legal risk your employer is trying to eliminate, that uncertainty alone is a reason to pause. I regularly help California employees assess severance leverage and negotiate stronger outcomes, and you can contact the Ruggles Law Firm at 916-758-8058 for a no-obligation evaluation.
Category #4: Job Role, Compensation, and Equity Issues That Affect Severance Negotiations
Certain employees naturally carry more legal leverage in a California severance negotiation because of their role, length of service, or how they were paid. These factors often increase both legal exposure and practical risk for employers.
This commonly applies to:
- Long-tenured employees with deep institutional knowledge
- Managers or supervisors with responsibility for people or operations
- Employees paid through commissions, bonuses, or RSUs
- Employees involved in sensitive projects, leadership transitions, or client relationships
California employment disputes frequently arise over unpaid commissions, bonus eligibility, equity vesting, misclassification, or incentive compensation that is forfeited or accelerated at termination. These issues are often fact-intensive, expensive to litigate, and difficult for employers to resolve quickly.
As a result, employers are often willing to increase severance to avoid disputes over compensation structures that are complicated, poorly documented, or inconsistently applied. The more complex the pay arrangement, the more uncertainty exists, and uncertainty creates leverage.
Matt’s Legal Perspective:
If your compensation was complicated, your exit probably should be too.
If you have RSUs and were terminated or laid off before they vested, and you are now being told you are losing that equity, read my detailed blog: RSUs After a Layoff in California: Can You Keep Unvested Stock After Termination?
Category #5: Employer Risk and the Desire to Avoid Litigation in Severance Negotiations
Some employers are especially motivated to resolve severance issues quietly and quickly. In those situations, the desire to avoid escalation itself becomes a source of legal leverage.
This is common when:
- Multiple employees are affected by the same issue
- A manager involved in the termination has prior complaints
- The company is undergoing layoffs, restructuring, or leadership changes
- The employer wants to avoid agency complaints or civil litigation
In California, employment disputes can escalate rapidly. Claims may move to the California Civil Rights Department (CRD), the Labor Commissioner (DLSE), or directly into civil court. Even when an employer believes it acted lawfully, escalation increases cost, disruption, and public exposure.
Employers that prioritize certainty often choose to pay more severance upfront rather than allow an issue to expand into a broader dispute. This motivation frequently drives severance negotiations, even in cases where the employer disputes liability.
Matt’s Legal Perspective:
Most severance deals happen because the employer wants the issue to stop growing.
Five Common Mistakes That Reduce Your Severance Negotiation Leverage in California
California employees often give up severance leverage unintentionally. These are the most common missteps that weaken negotiating power before negotiations ever gain traction.
If you’re an executive preparing to negotiate your exit, read my guide: Executive Severance Negotiation Mistakes and How to Avoid Them.
Mistake #1: Signing a Severance Agreement Too Quickly in California
Severance agreements almost always include deadlines, but very few require immediate acceptance. Rushing to sign sends a clear signal to the employer that leverage is low and pressure is working.
In California, employers routinely allow time for review, especially when they are seeking a broad release of legal claims. When an employee signs quickly, the employer learns there is little resistance and no perceived risk. That almost always ends any opportunity to negotiate better terms.
Taking time to evaluate the agreement preserves leverage. Speed benefits employers, not employees.
Mistake #2: Believing a Severance Offer Is “Non-Negotiable” in California
There is no universal or mandatory severance formula in California. Employers adjust severance offers based on risk, not fairness or consistency.
When employees accept the explanation that a severance package is “standard” or “non-negotiable,” they stop asking the only question that matters: what risk is the employer trying to eliminate? Employers change severance terms every day when risk justifies it. Treating the offer as fixed shuts down leverage before negotiations even begin.
If your employer says your severance offer is “non-negotiable,” read my blog: Non-Negotiable Severance in California: 5 Myths Dispelled By a Lawyer.
Mistake #3: Oversharing With HR During Severance Negotiations
Employees sometimes explain their emotions, speculate about motives, or provide unnecessary detail during severance discussions. Those statements can later be used to weaken potential claims or justify the employer’s position.
HR is not a neutral advisor. Statements made during severance discussions may be documented and relied upon later. Emotional narratives, inconsistent explanations, or speculation often reduce leverage instead of increasing it.
Professional, factual, and restrained communication preserves negotiating power and keeps the focus on risk, not personal grievances.
Mistake #4: : Not Understanding the Legal Rights You Give Up in a Severance Agreement
Many California employees focus only on the severance amount and ignore the value of the rights they are being asked to waive. Severance agreements typically include broad releases covering known and unknown claims, wage issues, or statutory penalties.
Releasing strong claims in exchange for modest severance is rarely a good trade. Once signed, those rights are gone. Employers rely on employees undervaluing what they are giving up.
Understanding the scope and value of the release is essential to negotiating severance from a position of strength.
If you want to know what to watch for before signing, read my article: Top 10 Things to Look Out For in a Severance Agreement.
Mistake #5: Trying to Negotiate a Bigger Severance Without a California Employment Lawyer
When employees hear a lawyer say they should have a California employment lawyer negotiate their severance, the natural reaction is skepticism. Some people roll their eyes and assume it’s just a self-serving pitch. That reaction is understandable. No one likes being told they need a lawyer, especially right after being terminated.
The reality, however, is far less dramatic and far more practical.
Most people have very little understanding of California employment law, particularly how severance leverage actually works. More importantly, even people who are skilled negotiators in their professional lives are rarely effective negotiating on their own behalf in this situation. Termination is emotional. It is personal. And it happens at a moment when judgment is often clouded by stress, anger, or fear about what comes next.
Employers know this. They negotiate severance through counsel who understand risk, liability, and litigation exposure. When an employee negotiates alone, employers often assume the employee does not fully understand the legal value of the claims being released or how severance decisions are actually made. That assumption frequently results in lower offers, rigid positions, and little incentive for the employer to move.
A California employment lawyer brings two things most employees cannot provide for themselves in this context: legal perspective and emotional distance. An experienced lawyer knows which facts matter, which ones weaken leverage, and how to raise risk without oversharing or damaging potential claims. Even when negotiations remain informal, the involvement of counsel often changes how seriously the employer evaluates severance exposure.
This is not about intimidation or posturing. It is about understanding how severance decisions are made on the employer’s side and responding accordingly. Employees who try to handle severance negotiations on their own often leave value on the table without ever realizing it.
If you’re trying to figure out how to choose the right attorney for your case, read my guide: How Do I Select a California Employment Lawyer?
Closing Thought
Severance negotiations in California are not about fairness. They are about risk.
When legal exposure exists, employers pay more to eliminate it. When employees understand where leverage comes from, and how to protect it, they negotiate from strength rather than pressure.
If you are reviewing a severance offer and wondering whether you have leverage for more, that question is worth answering before you sign anything.
Frequently Asked Questions About Negotiating a Bigger Severance Package in California
When do California employees have legal leverage to negotiate a bigger severance package?
California employees typically have legal leverage to negotiate a bigger severance package when the termination creates potential legal exposure for the employer. This often includes situations involving FEHA claims such as discrimination, retaliation, or harassment, as well as whistleblower retaliation under Labor Code section 1102.5, wage and hour violations, or broken employment promises. The key is not whether the employee can prove a claim immediately, but whether the facts create enough risk that the employer wants certainty instead of litigation.
What types of legal claims create the strongest severance leverage in California?
The strongest severance leverage in California usually comes from claims under the Fair Employment and Housing Act (FEHA). These include retaliation for complaining about discrimination or harassment, termination after requesting medical or pregnancy leave, disability accommodation issues, and disparate treatment based on protected characteristics. Other claims that often increase severance leverage include whistleblower retaliation, unpaid wages or commissions, misclassification, and promissory fraud. Employers tend to pay more severance when multiple statutes or overlapping claims create uncertainty.
If you want to learn how to use leverage to improve your severance deal, read my article: How To Use Leverage in Severance Negotiation.
Can I negotiate severance in California even if my employer says the offer is “non-negotiable”?
Yes. Despite what employers often say, severance offers in California are frequently negotiable when legal leverage exists. There is no legally required “standard severance package” under California law. Employers adjust severance offers based on perceived risk, not fairness. When an employee understands their legal leverage and raises it strategically, employers often increase severance to avoid escalation, agency complaints, or litigation.
Do I need a California employment lawyer to negotiate a bigger severance deal?
While not legally required, having a California employment lawyer often makes a significant difference in severance negotiations. Employers evaluate severance risk through legal counsel and tend to take negotiations more seriously when an employee is represented. An experienced California employment lawyer understands which facts increase leverage, how FEHA and retaliation claims are evaluated, and how to negotiate without oversharing or weakening potential claims. Employees who negotiate alone often accept less severance than the employer was willing to pay.
How much severance can I realistically negotiate in California?
There is no fixed or “average” severance amount in California. The amount an employee can realistically negotiate depends on the employer’s legal risk, not tenure, job title, or fairness. Employees with credible exposure under the FEHA, retaliation laws, unpaid wages or commissions, or poorly handled terminations often negotiate severance far above an employer’s initial offer. In contrast, employees with little legal exposure may see minimal movement. Severance outcomes are driven by risk assessment, not formulas.
What factors increase severance pay in California?
Severance pay in California typically increases when the employer faces uncertainty or potential legal exposure. Factors that commonly increase severance include terminations following protected activity, medical or disability leave issues, retaliation concerns, inconsistent termination explanations, unpaid compensation disputes, and broad release terms the employer wants signed. The more risk an employer is trying to eliminate, the more leverage an employee may have to negotiate higher severance.
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 evaluation.
Blog posts are not legal advice and are for information purposes only. Contact the Ruggles Law Firm for consideration of your individual circumstances.
