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What Civil Code 1542 means in a severance agreement
The paragraph in capital letters that releases claims you do not know about yet, what the statute says, and why it matters before you sign.
Last reviewed November 6, 2026. General information about California law, not legal advice.
The short answer
California law says a general release does not cover claims you do not know or suspect exist unless you expressly give up that protection. The Civil Code 1542 paragraph in a separation agreement is that waiver. It is often the broadest sentence in the document.
What the statute says
Civil Code 1542 reads: “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.”
In plain words: a release normally covers only the claims you know about. To release unknown claims too, you have to give up this protection on purpose.
What the waiver paragraph does
A separation agreement usually quotes Section 1542 and then says you waive it. That turns a release of known claims into a release of known and unknown claims.
Why it matters before you sign
Because the waiver reaches claims you do not yet know about, people often take time before signing to think through anything that happened at work that could matter later. That is what the review period is for.
What it cannot reach
Some rights survive any release. Filing a charge with a government agency, reimbursement of necessary work expenses, and wages already owed are examples covered elsewhere on this site.
Common questions
Why is it in capital letters?
Agreements usually quote the statute and set it off prominently because the waiver of unknown claims has to be explicit.
Does it waive everything?
No release can waive rights the law makes non-waivable, such as filing a charge with a government agency or reimbursement of necessary work expenses.
Not legal advice
This article explains how California and federal rules generally work. It does not tell you what to do in your situation, and reading it does not create an attorney-client relationship. Every example on this site is a fictional story. For advice, seefree and low-cost help in California.