If you’ve been laid off from a tech company in the past few weeks, you’re not alone. Tens of thousands of workers across California have received severance offers from companies like Microsoft, OpenAI, and others — and most are being pressured to sign quickly. Before you do, read this.
What is a severance agreement?
A severance agreement is a legal contract between you and your employer offered at the time of termination. In exchange for financial compensation — a lump sum, continuation of pay, or benefits extension — your employer typically asks you to waive certain legal rights, including your right to sue for wrongful termination or discrimination.
Sounds straightforward. But the fine print is where things get complicated.
What should a fair severance package include?
There’s no state law in California that requires employers to offer severance — but if they do offer it, the terms must comply with specific legal standards. A legitimate severance package should generally include:
- Severance pay proportional to your time at the company (typically 1–2 weeks per year of service)
- Continuation of health benefits for a defined period
- Vesting of any earned equity or bonuses
- A clear non-disparagement clause (cutting both ways — not just limiting you)
- An ADEA waiver notice if you’re 40 or older, including a 21-day review period and 7-day revocation right
Important: Under California law, you cannot be pressured to sign a severance agreement immediately. You have the right to consult with an attorney before signing — and you should.
When should you negotiate?
Almost always. Employers expect negotiation on severance. Common areas where workers leave money on the table include:
- The base severance amount itself — especially if you were a high-performing employee or senior-level hire
- Non-compete and non-solicitation clauses (many are unenforceable in California)
- The scope of the release — what rights exactly are you waiving?
- Equity acceleration — did you have unvested shares that should be addressed?
- References and departure language — how will the company describe your exit?
When should you challenge or reject the offer?
There are situations where signing may not be in your best interest — or where a stronger legal claim exists:
- You were part of a layoff that disproportionately affected a protected class (age, gender, race, disability)
- Your termination followed protected activity such as a complaint about harassment or unpaid wages
- You were laid off just before a major equity vest or bonus date (a common tactic)
- The agreement contains illegal clauses — such as waiving future EEOC claims
- Your employer violated the WARN Act (60-day notice requirement for mass layoffs)
In these cases, an experienced employment attorney can evaluate whether you have a claim worth more than what’s being offered.
The 2026 tech layoff wave: why this moment matters
The scale of layoffs happening right now in California’s tech sector is creating a unique legal environment. Class action risks are elevated. Age discrimination claims are rising. And many companies are issuing standardized severance packages designed to minimize their exposure — not yours.
If you worked at a company that laid off 50 or more employees within a 30-day period, your employer was required under the WARN Act to give you 60 days’ advance notice or equivalent pay. Many didn’t.
Hackett Law Firm · Employment & Personal Injury · California
Got a severance offer? Don’t sign until you’ve spoken with us.
