Employment Contracts & Severance in Saratoga, CA

Almost never, and California tightened the rules again in 2024. Business and Professions Code section 16600 voids every contract that restrains someone from engaging in a lawful profession, trade, or business, and the Legislature has directed that it be read broadly to void any non-compete in the employment context no matter how narrowly tailored. Two 2024 additions go further. Section 16600.1 made it unlawful to include a non-compete clause at all, and required employers to notify affected employees in writing, by February 14, 2024, that the clause is void. That notice had to be an individualized written communication sent to the person's last known mailing address and their email address, and it had to reach former employees as well, going back to anyone employed after January 1, 2022. Failing to send it is itself an act of unfair competition. Section 16600.5 provides that an employer may not enter into a void contract or attempt to enforce one, that doing either is a civil violation, and that an employee, former employee, or prospective employee may sue for injunctive relief and actual damages and recover attorney's fees if they prevail. That applies even where the agreement was signed and the employment took place outside California. If you have not sent that notice, or you are not certain your templates were cleaned up, it is worth reviewing now rather than when someone asks.

A severance agreement releasing legal claims generally needs a clear, express waiver of California Civil Code Section 1542 to cover unknown claims, must comply with the federal OWBPA's consideration and revocation period requirements for employees 40 or older, and should avoid non-disparagement or confidentiality language that violates California's Silenced No More Act by attempting to silence disclosure of unlawful conduct. A severance agreement that skips these requirements risks being partially or fully unenforceable exactly when you need it most.

You can include a mutual non-disparagement clause, but California's Silenced No More Act (SB 331) prohibits using it to prevent an employee from disclosing information about unlawful acts in the workplace, including discrimination, harassment, or retaliation. A properly scoped clause can still protect your business's general reputation while remaining enforceable under California law.

An offer letter typically confirms the basic terms of at-will employment, title, compensation, and start date, without creating a fixed-term commitment. A formal employment agreement is used for executives or specialized roles and can include fixed terms, severance triggers, equity vesting provisions, and specific termination procedures. Using the wrong document type, or careless language in an offer letter, can unintentionally convert an at-will relationship into one with contractual protections you didn't intend to offer.

Often, yes. A group layoff can trigger notice obligations under both the federal WARN Act and California's own version, and the California statute is the one employers more often miss. Under Labor Code section 1401, an employer may not order a mass layoff, relocation, or termination at a covered establishment unless it gives 60 days written notice, and that notice does not go only to employees. It also goes to the Employment Development Department, the local workforce development board, and the chief elected official of each city and county where the action occurs. Getting it wrong is expensive: an employer that fails to give notice is liable for back pay and the value of lost benefits for the notice period, and can face a civil penalty for each day of violation. Separately, where severance is offered to a group in exchange for a release, the federal Older Workers Benefit Protection Act requires a longer consideration period than for an individual agreement and requires disclosure about the group of employees selected. Severance terms for a group layoff should be reviewed alongside the notice obligations rather than separately.

California treats restraints on trade far more strictly than most states, and non-solicitation provisions are not a safe workaround for a non-compete. California appellate authority has treated employee non-solicitation provisions, clauses barring a departing employee from recruiting former colleagues, as void restraints on trade. Customer non-solicitation provisions are generally enforceable only to the extent they genuinely protect trade secrets, not simply to protect relationships. Since 2024, including or attempting to enforce a void restraint carries its own exposure, so a boilerplate non-solicit that would be routine in another state is now an affirmative risk in California. The reliable tools here are a well-drafted trade secret and confidentiality agreement, disciplined offboarding when an employee with access to trade secrets departs, and practical safeguards such as restricting access to sensitive information. In practice that means three things worth auditing now: whether your confidentiality agreement actually identifies the categories of information it protects, whether any non-solicit language in your templates would survive section 16600, and whether your offboarding process actually cuts access when someone leaves.