Short Answer: There is no average or typical amount of severance pay that is offered to an employee.
Rationale: No California law requires an employer to provide an employee with severance pay. Similarly, no California law requires an employee to agree to the terms of their employer's severance agreement.
Note: An employer offers an employee severance pay in consideration for the employee agreeing to the terms of an employer's severance agreement, which can be expected to require the employee to waive any employment related claims they may have against the employer.
Thus, entering into, or not entering into, a severance agreement, is a completely voluntary choice for both an employer and an employee. Consequently, because neither an employer, nor an employee, are required to agree to the terms of a severance agreement, both parties are free to negotiate the terms of the severance agreement. As a result, there is generally no set amount or average amount of severance pay that an employee should expect to be offered in consideration for agreeing to the terms of their employer's severance agreement. Rather, the amount of severance pay, and whether or not an employee should accept this amount and agree to the terms of their employer's severance agreement, depends on many factors. The most important factor is whether or not an employee has any viable employment related claim against their employer.
If Severance Agreements Are Voluntary, Why Do Employers Offer Them to Employees?
Employers like certainty. Employers want to know that after the termination of an employee's employment, that employee will not thereafter file a lawsuit against the company for an employment related claim. Defending a lawsuit costs time and money, potentially exposes the employer to monetary liability, and detracts from the operation of the employer's business. As such, many employers find it worthwhile to offer their employees severance pay in exchange for an employee agreeing to the terms of a severance agreement so they know for certain the employee will not be bringing a lawsuit against them.
Note: While there are certainly strong business reasons for an employer to provide an employee with severance pay in exchange for signing a severance agreement, a less cynical point of view would be that an employer, subsequent to the termination of the employee's employment, wants to provide the terminated employee some financial means to “ease” the termination of their employment.
How Can an Employee Assess Whether the Severance Pay Offered is a Reasonable Amount in Exchange for Agreeing to the terms of the Severance Agreement?
Because a severance agreement is a completely voluntary agreement between an employee and an employer, many factors determine whether the amount offered to an employee is reasonable in exchange for entering into a severance agreement.
The most important factor for an employee when deciding whether or not the amount of severance pay offered is reasonable, is whether or not the employee has any viable legal claims against their employer. This is because if the employee were to agree to the terms of the employer's severance agreement, an employee would almost certainly be forfeiting their right to sue their employer for that employment related claim.
If an employee has a viable legal claim against their employer, the employee would want to receive an amount of severance pay that would adequately compensate them for forfeiting their right to pursue their employment related claim. The stronger an employee's legal claim against the employer, the more valuable that legal claim is and the more severance pay an employee should receive for forfeiting their right to pursue that claim.
It is essential that an employee consult with an experienced employment attorney to determine if they have any employment related claims against their employer before agreeing to the terms of any severance agreement.