6 Tips for Negotiating Your Best Possible Exit Agreement in California

exit negotiations

Whether you’re being fired, laid off, or choosing to move on, employers might ask you to sign an exit or separation agreement in exchange for separation payment. These legally binding documents aim to protect the company’s interests—but what about your own?

All too often, employees simply sign whatever is put in front of them, potentially sacrificing compensation, benefits, or future opportunities they may deserve.

In California, you have more leverage than you think when negotiating exit agreements. By understanding your rights and preparing diligently, you can advocate for an exit package that fully values your contributions and provides a secure path forward.

Don’t shortchange yourself during this transitional period. Here are six tips for negotiating exit agreements.

1. Consult an Employment Law Attorney From the Outset

Engaging legal counsel from the very start allows you to understand your full rights during this transition. TONG LAW can advise if you have grounds for wrongful termination claims, particularly if negotiations should sour. Alternatively, we can advise when agreeable terms make the most sense.

First and foremost, TONG LAW clarifies California laws on vital exit agreement components like minimum severance pay, healthcare coverage continuation, stock vesting, and expense reimbursement. We’ll also assess the documented reasons for your departure to gauge relative negotiating leverage.

2. Quantify Your Contributions to The Organization

Organizations often lowball exit packages, falling back on standard policies instead of considering individual circumstances. You must proactively quantify your value to justify your proposed terms.

We have clients catalog their accomplishments in various areas:

  • Key projects completed under or ahead of budget
  • Recurring cost savings initiatives implemented
  • Expanded revenue streams opened through partnerships
  • Recognitions like “Employee of the Month” awards

Tallying up major achievements show how your work has positively impacted the company’s operations and strategy. These talking points reinforce why you merit personalized exit terms reflecting your efforts.

3. Understand Non-Negotiable Provisions

Certain exit agreements in California have pre-defined legal parameters that establish non-negotiable boundaries. TONG LAW clarifies terms in this category so you don’t waste time arguing futile points. Instead, we focus on negotiations where flexibility truly exists.

Non-negotiable provisions typically include:

  • COBRA Information – Details on continuing health insurance coverage after termination, as mandated by federal law.
  • Confidentiality Agreement – Obligating the employee not to disclose the employer’s proprietary information and trade secrets.
  • General Release of Claims – Waiving the employee’s right to sue the employer for any potential claims.

Negotiable provisions may include:

  • Severance Pay – Compensation provided to terminated employees, negotiated based on company policy or agreements.
  • Equity Vesting – Potential for unvested stock options and grants to fully vest upon termination.
  • Non-Compete Clauses – Restricting the employee’s ability to work for competitors for a defined period.
  • References – Securing commitments from the employer to provide positive references or a neutral reference.

By understanding the non-negotiable constraints, we can strategically negotiate the discretionary provisions to create an optimal exit package.

4. Make an Ambitious Opening Request

When making your opening request for severance pay and other exit terms, you should anchor the negotiations with an ambitious number/offer – something slightly higher than your ideal scenario. The reason you want to start off asking for a bit more than you expect to get is twofold:

  1. It signals that you know your value and worth to the company. You’re setting expectations high.
  2. It allows some room for you to make concessions later while still retaining your core desired conditions.

For example, our employment lawyers can help you model different severance formulas to lead with depending on your specific situation:

  • Your position at the company and years of tenure
  • Your documented high-performance level
  • Official company severance policies and precedents
  • How eager leadership seems to reach an agreement

By asking for an optimistic but defensible initial offer based on these factors, you make a strong opening statement and leave some negotiating room for later compromise if needed.

5. Strategically Identify Potential Concession Areas

While the severance payment amount and healthcare coverage duration should remain firm as your “anchor” terms, other secondary provisions can sometimes be used as “olive branches” to bridge gaps if negotiations stall. These secondary terms you may consider compromising on could include:

  • The severance gross-up calculations
  • Securing neutral reference guarantees from the employer
  • Adding mutual non-disparagement clauses
  • Affirming confidentiality

Our lawyers can help assess which of these concessions make strategic sense for your priorities. While every client may prioritize certain terms over others, the key is maintaining perspective. However, offering flexibility in the secondary areas can demonstrate good faith if reaching an accord requires bridging differences through compromise.

6. Meticulously Review Agreement Drafts

Carefully reviewing each draft of the agreement is crucial, as subtle differences in wording can greatly change the meaning and impact on your rights and benefits. Our employment lawyers rigorously proofread every negotiation draft to catch any attempts to add provisions that could limit your protections, including clauses meant to:

  • Reduce guaranteed severance amounts or bonuses owed
  • Expand acceptable causes for termination
  • Rescind rights and remedies you have as a whistleblower

TONG LAW also flags any attempts to retroactively change the documented reasons given for your departure from the company.

Finally, we review all time windows – making sure you have adequate time to consider the agreement and don’t lose the ability to revoke acceptance if unsatisfied during the legally mandated review period.

Frequently Asked Questions

What is the minimum severance required in California exit negotiation agreements?

California law does not mandate severance for private-sector employees. However, negotiating custom severance based on factors like tenure, contract terms, and documented performance is advised.

Can I negotiate continued health insurance coverage after leaving a California job?

Yes, under COBRA regulations, employees can request that employers maintain their existing health insurance plans for 18-36 months during California job transition negotiations.

Should I have a lawyer review my California exit negotiation agreement?

Yes, consulting an employment law attorney during exit negotiations is highly recommended to understand your rights, review agreement drafts, and strengthen your position in talks with a former or soon-to-be former employer.

How can I negotiate accelerated vesting of equity during an exit negotiation in California?

You may be able to negotiate for accelerated vesting of any unvested equity as part of your exit package since unvested equity is typically considered wages in California. During negotiations, make a case that any equity you’ve been granted but haven’t yet vested will be allowed to vest fully upon termination since those wages were earned through your work.

Leverage Our Years of Employment Law Experience

If you unexpectedly have to negotiate a departure or separation agreement, you want legal experts in your corner. TONG LAW can help you secure a favorable exit package in California.

We will advise you on your full rights, strengthen your negotiating position, and provide seasoned guidance at every stage. We take pride in consistently delivering outcomes for clients navigating transitions like resignations or terminations.

Don’t leave severance, benefits, references, or other key terms on the table simply because you didn’t have the right advice. Contact our team today so we can start mapping out a winning negotiation strategy tailored to your situation. With our support, you can reach the best possible agreement and move forward on steady footing.

Author Bio

Vincent Tong

Vincent Tong is the CEO and Managing Partner of TONG LAW, a business and employment law firm located in Oakland, CA. Vincent is a fierce advocate for employees facing discrimination and wrongful termination. With several successful jury trial victories and favorable settlements, he has earned a strong reputation for delivering exceptional results for his clients.

In addition, Vincent provides invaluable counsel to businesses, guiding them on critical matters such as formation and governance, regulatory compliance, and protection of intellectual property assets. His depth of experience allows him to anticipate risks, devise strategies to avoid legal pitfalls, and empower clients to pursue their goals confidently.

Vincent currently serves as the 2021 President of the Board of Directors for the Alameda County Bar Association and sits on the Executive Board for the California Employment Lawyers Association. Recognized for outstanding skills and client dedication, he has consecutively earned the Super Lawyers’ Rising Star honor since 2015, reserved for the top 2.5% of attorneys. He also received the Distinguished Service Award for New Attorney from the Alameda County Bar Association in 2016. He is licensed to practice before all California state courts and the United States District Court for the Northern and Central Districts of California.

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