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Orange County Employment Attorney’s Take On The Latest Severance and Releases Amendment

Orange County Employment Attorney

Offers Opinion About The Latest Amendment

A very important amendment that has gone into effect as of January 1, 2019, is the change to the language of California Civil Code Section 1542. The changes to the language of the Code resulted from California Senate Bill No. 1431. More specifically, Section 3 of the Bill adds “releasing party” and “released party” alongside “creditor” and “debtor.” Section 3 of the Bill also changes “must have materially affected” to “would have materially affected” regarding the creditor’s or releasing party’s decision to settle.

The changes in the language of Section 1542 have important effects on all aspects of civil litigation, including employment law. So, employers who settle cases in 2019, must heed the changes. California employers must make sure to include the new language of Section 1542 in all the severance agreements and settlement agreement and releases executed in 2019.

So, what are the changes? The 2019 severance and releases must contain the below language:

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

At first glance, it is difficult to decipher the changes as a new language is very close to the old language of Section 1542. To clarify the changes, the language below clearly shows the modification made to Section 1542:

A general release does not extend to claims which that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, which and that if known by him or her, must would have materially affected his or her settlement with the debtor or released party.

To make sure that all releases are enforceable, the new language needs to be implemented by all employment law lawyer immediately.

Contact Orange County Employment Attorney, Tawny Mazarei for further information or assistance.

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