Executive Employment / Severance Representation
Executive agreements decide equity, severance, and post-employment restrictions, and those terms are far easier to fix before signing than after.
Executives negotiate different agreements than most employees, and the leverage points are different. Equity, deferred compensation, change of control provisions, restrictive covenants, and release language all carry consequences that are difficult to undo once a signature is on the page. Review before signing is considerably more effective than a dispute afterward.
Employment Agreements
The terms that deserve the closest attention are usually these:
- How base salary, bonus targets, and incentive formulas are defined, and who decides whether targets were met
- Equity grants, vesting schedules, acceleration on a change of control, and the treatment of unvested shares at separation
- The definition of cause, which controls whether a departure triggers severance
- The definition of good reason, which determines whether a demotion, pay cut, or relocation allows the executive to resign and still collect severance
- Notice periods and cure rights on both sides
- Indemnification and directors and officers liability coverage
- Arbitration clauses, allocation of arbitration costs, and choice of forum
- Confidentiality obligations and intellectual property assignment
Case Results
Restrictive Covenants in California
California does not enforce employee noncompete agreements. Business and Professions Code section 16600 voids contracts that restrain a person from engaging in a lawful profession, trade, or business, and courts read that provision broadly.
Two laws effective January 1, 2024 extended the prohibition further. Senate Bill 699 added section 16600.5, providing that a void noncompete is unenforceable regardless of where or when it was signed, and creating a private right of action with attorneys’ fees for employees. Assembly Bill 1076 added section 16600.1, making it unlawful to include a noncompete clause in an employment contract and requiring employers to send individualized written notice to affected current and former employees.
Customer nonsolicitation provisions are generally void as well. Genuine trade secret protection remains enforceable, and a narrow exception continues to apply to noncompetes tied to the sale of a business or an ownership interest.
Severance Negotiation
Severance is rarely a fixed number. Points that are commonly negotiable include the cash amount and payment schedule, continuation of health coverage, the treatment of unvested equity, the reference and internal announcement language, the scope of the release, the return of company property, and whether the executive retains a laptop or phone.
The release deserves particular scrutiny. A general release ordinarily waives claims the executive has not yet evaluated, including discrimination, retaliation, wage, and equity claims. Some rights cannot be waived at all, among them the right to file a charge with a government agency and the right to wages already earned.
Statutory Limits on Release Language
- Employees 40 and older must receive at least 21 days to consider a waiver of age discrimination claims, 45 days in a group termination, and 7 days to revoke after signing
- Senate Bill 331 restricts provisions that prevent disclosure of workplace harassment, discrimination, or retaliation
- Earned wages, including accrued vacation and commissions, cannot be treated as consideration for a severance agreement
- Effective January 1, 2026, Assembly Bill 692 bars most agreements requiring repayment of training costs or sign on bonuses upon separation
When a Negotiation Becomes a Claim
An executive who is pushed out shortly after raising a compliance concern, reporting harassment, requesting medical leave, or objecting to a practice they believed was unlawful may have a retaliation or wrongful termination claim that exists independently of the contract. The strength of that claim directly affects what a reasonable severance package looks like, which is why an assessment should happen before any release is signed.
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