Severance pay is a benefit offered by some employers to involuntarily terminated employees. The amount of severance pay offered is usually based on the length of employment.
Unfortunately, under no federal law, including the federal Fair Labor Standards Act, are employers legally obligated to provide severance pay to terminated employees. The state of California also has no legal requirement that employers provide severance pay to an employee upon termination. The only employees entitled to severance pay are unionized employees whose collect bargaining agreements obligates employers.
When employers offer severance pay to non-unionized employees, they often do so to reduce their legal liability. In exchange for a sum of money, the terminated employee is required to release their rights to sue the company. Severance agreements may also include confidentiality provisions prohibiting the employee from discussing the reason for their termination, speaking poorly about the company, or sharing trade secrets.