California Separation Agreements: Releases, Section 1542 Waivers, and ADEA Compliance
A California separation agreement trades severance for a release of claims. To bind the employee to unknown claims, it must include an express Civil Code § 1542 waiver, and to release age claims it must satisfy the federal OWBPA/ADEA timing rules — including a 7-day revocation period that cannot be waived.
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Legal Requirements in California
A general release does not extinguish unknown claims unless the employee expressly waives Civil Code § 1542, which protects claims "not known or suspected to exist" at the time of signing.
To release federal age-discrimination claims, the agreement must be "knowing and voluntary" under the OWBPA amendments to the ADEA (29 U.S.C. § 626(f)), including a written, plain-language waiver that references the ADEA.
Employees 40 or older must be given at least 21 days to consider the agreement (45 days in a group termination or exit incentive program) and at least 7 days after signing to revoke (29 U.S.C. § 626(f)).
The agreement must advise the employee in writing to consult an attorney before signing (OWBPA / ADEA requirement).
A separation or settlement agreement may not bar disclosure of unlawful acts in the workplace or facts about harassment, discrimination, or retaliation (Cal. Code Civ. Proc. § 1001; Cal. Gov. Code § 12964.5).
The agreement cannot require waiver of non-waivable rights — e.g., earned wages, vested benefits, workers' compensation, unemployment insurance, or the right to file a charge with an agency.
Key Statutes & Regulations
- Cal. Civ. Code § 1542 — Release does not extend to unknown claims absent express waiver (2025)
- 29 U.S.C. § 626(f) — OWBPA "knowing and voluntary" waiver requirements for ADEA claims (21/45-day and 7-day rules) (2025)
- Cal. Gov. Code § 12964.5 — FEHA limits on non-disparagement and non-disclosure of unlawful workplace conduct (2025)
- Cal. Code Civ. Proc. § 1001 — Prohibition on settlement provisions barring disclosure of harassment/discrimination facts (2025)
- Cal. Bus. & Prof. Code § 16600 — Voids contractual restraints on lawful profession, trade, or business (2025)
Common Pitfalls
- •Omitting an express Civil Code § 1542 waiver, leaving the employer exposed to later "unknown" claims the release was meant to cover.
- •Treating the 21-day consideration or 7-day revocation period as optional — noncompliance can invalidate the ADEA release for workers 40 and older.
- •Including a non-compete or broad "no re-employment / no competition" term that is void under § 16600 and may itself trigger employer liability under SB 699.
- •Drafting a non-disparagement or confidentiality clause that unlawfully restricts disclosure of harassment or discrimination, violating Gov. Code § 12964.5.
Local Terminology
- Section 1542 waiver
- An express acknowledgment by which the employee gives up the protection of Civil Code § 1542 and releases even claims unknown or unsuspected at the time of signing.
- OWBPA / ADEA revocation period
- The mandatory 7-day window after signing during which an employee 40 or older may revoke a release of federal age-discrimination claims; it cannot be waived.
- Release of claims
- The core promise in a separation agreement by which the employee, in exchange for severance, gives up the right to sue the employer for covered claims.
How California Differs
Unlike a generic release, a California release is ineffective against unknown claims without an explicit § 1542 waiver — boilerplate alone is not enough.
California prohibits releasing certain claims entirely (e.g., FEHA non-disparagement that gags disclosure of unlawful conduct), narrowing what a release can cover compared to many states.
The 7-day ADEA revocation period is mandatory and non-waivable, so severance should not be paid until it expires.
A purported non-compete in a California separation agreement is void and unenforceable under Bus. & Prof. Code § 16600, even if the employee "agrees" to it as part of severance.
California voids choice-of-law or forum clauses that try to deprive a California employee of California-law protections (Lab. Code § 925).
Frequently Asked Questions
What is a Section 1542 waiver in a California separation agreement?
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A Section 1542 waiver is an express clause in which the employee gives up California Civil Code § 1542's protection and releases even unknown or unsuspected claims. Without it, a general release in California does not bar claims the employee did not know about when signing — so it is essential to a complete release.
How many days must an employee get to review a California severance agreement?
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If the employee is 40 or older and releasing age claims, the OWBPA requires at least 21 days to consider the agreement (45 days for group layoffs) and at least 7 days after signing to revoke. The 21-day period may be shortened by the employee, but the 7-day revocation period cannot be waived.
Can a California severance agreement include a non-compete?
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No. Under Bus. & Prof. Code § 16600, non-compete clauses are void in California even inside a severance agreement. Worse, SB 699 and AB 1076 (effective 2024) let employees sue employers for including or trying to enforce one, so adding a non-compete creates liability rather than protection.
Can a California separation agreement stop an employee from discussing harassment?
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No. Under Gov. Code § 12964.5 and Code of Civil Procedure § 1001, a separation or settlement agreement cannot prohibit an employee from disclosing facts about unlawful conduct such as harassment, discrimination, or retaliation. Non-disparagement and confidentiality clauses must carve out these protected disclosures.
When should severance be paid relative to the revocation period?
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When the release covers ADEA claims, the employee has 7 days after signing to revoke, and that period cannot be waived. Best practice is to withhold severance payment until the 7-day revocation window expires, ensuring the release is final and effective before any money changes hands.
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