Severance agreements will almost always have language requiring, as a condition of receiving a severance payment, that any company property be returned to the employer. Typical employer property can include keys, uniforms, cars, emails and even intellectual property and work emails. This article discusses some common issues related to the return of company property in California severance agreements.
Why is the employer insistent about getting their property back?
Employers often include this language to keep company secrets from getting in the hands of competitors and to reinforce existing legal obligations that the employee already owes the employer.
For legal background, the employee in most situations will already be obligated by law to return employer property to the employer at the end of his or her employment. This is for multiple reasons. First, employees will oftentimes sign documents, usually called “Acknowledgments”, at the inception of their employment, promising that customer lists, inventions, physical property, and other intellectual property acquired by the employee through his or her work belong exclusively to the employer. These acknowledgments are independently enforceable contracts even without a severance agreement.
Second, the common law of agency, which has largely been adopted in California, states that inventions created or things made by an employee during his or employment, belong to the employer and not the employee. Therefore, independent of a severance agreement or any other contract, the law would very likely compel the return of company property to the employer. The employer’s demand in the severance agreement itself is simply a reminder to the employee of a pre-existing legal obligation and incentivizes the employee to follow through with it.
What type of company property typically must be returned?
The type of company property that must be returned very much depends on what the employee did while employed. For blue collar workers, the employee will oftentimes be in possession of tools, keys, or uniforms, but never in possession of emails, electronically stored property, or intellectual property. For white collar or remote workers, company property can include phones, laptops, printed papers, emails, spreadsheets, PowerPoint presentations, and any other form of electronically stored information.
How does the employee return company property?
Larger and more sophisticated employers who regularly terminate employees will typically be proactive in recovering company property from their former employees, even making efforts to do so before a severance agreement is agreed upon. This can include recovering this property from the employee in-person on his or her last day of work. For remote employees, it is customary for the employer to send the employee a postage prepaid box or envelope for the employee to mail the company property back to the employer. Employees are arguably not obligated legally to incur costs or expenses to return company property. (Lab. Code § 2802.) Moreover, requiring the employee to drive a long distance to return property in-person would require the employer to pay the employee the minimum wage.
For employers who are unclear on how company property is to be returned, employee’s should be proactive and ask their employer via email how the property is going to be collected by the employer.
Have you been abruptly fired and been given a severance agreement? Contact the Law Office of Brian Mathias today.