Before signing a severance agreement it is important to review it carefully. Preferably one should review it with the help of an attorney before signing since a severance agreement will often contain language called a 'release' that could waive important rights, including specifically the right to sue the employer. Many people may know to keep an eye out for the release, but it also important to scrutinize the statements of facts included in the contract.

While it may be tempting treat recitals or other factual statements in a contract as merely providing context to interpret its terms, these statements can have significant consequences. Under the doctrine of estoppel by contact and California Evidence Code § 622, any facts recited in a written agreement are conclusively presumed to be true between the parties and their successors. This means that an employee who signs a severance agreement may be bound by those facts in any future dispute with the employer.

Whether certain facts are admitted may seem unimportant because severance agreements will typically include the release of even unknown claims. But there may be facts in a severance agreement that could impact other claims that may fall outside the scope of the release, whether for or against the employee. 

For example, California law restricts a release for wage claims. Under California Labor Code § 206.5, an employer cannot require an employee to sign a release of claims for wages owed unless those wages have already been paid in full. Additionally, an employer cannot require, as condition of receiving payment, an employee to sign a statement of hours worked that the employer knows is false. In other words, claims for wages may survive the release and admitting facts related to the basis for wages could harm an employees chances of recovering all wages owed. 

Therefore, an employee should carefully review a severance agreement and any recited facts carefully. An employee should consider contacting a lawyer to review the severance with them and how it may impact them, which can include evaluating any potential claims the employee may have against the employer.