Severance agreement and general release

Federal base including the Older Workers Benefit Protection Act provisions for an employee aged 40 or older

A release of age claims is unenforceable unless it meets every requirement of the Older Workers Benefit Protection Act, and courts read those requirements strictly. This base carries all of them: a specific reference to the ADEA, consideration beyond what the employee is already owed, written advice to consult an attorney, the review period, the seven-day revocation, and the decisional-unit disclosure for a group program. It also keeps the release away from the rights an employee cannot give up. Bracketed items are your choices, and the review period changes depending on whether this is an individual exit or part of a group program.

Before you use this

• Age matters. If the employee is 40 or older and you want a release of age claims, every OWBPA provision below has to be present and accurate. If the employee is under 40, sections 6 and 7 can be simplified, but the agency carve-out in section 8 still belongs there.
• Individual or group. An individual exit uses 21 days to consider. An exit incentive or other termination program offered to a group or class uses 45 days and requires the decisional-unit disclosure in Exhibit A. Getting this wrong voids the age release.
• Do not start the clock again by accident. Changes to the agreement, material or not, do not restart the review period. Make sure the date the employee received it is recorded.
• State law adds requirements. California requires a release of unknown claims to quote Civil Code section 1542 and to state that the employee waives its protection; without that, the release of unknown claims fails. New York adds its own consideration and revocation periods before a harassment claim may be kept confidential. Several other states require specific language preserving the right to report to a state agency.
• Final pay is separate. Wages already earned are owed regardless of whether the employee signs. Do not condition them on this agreement.

Severance Agreement and General Release

This Severance Agreement and General Release (the "Agreement") is between [Employee name] ("Employee") and [Company legal name] ("the Company"). Employee received this Agreement on [date].

1. Separation

Employee's employment with the Company ended, or will end, on [date] (the "Separation Date"). Employee's final regular pay and any accrued and unused [paid time off] required to be paid under state law will be paid on [date] in accordance with applicable law, whether or not Employee signs this Agreement.

2. Severance consideration

In exchange for the release and other promises in this Agreement, and in addition to any wages, accrued paid time off, or other amounts to which Employee is already entitled, the Company will provide [describe the severance payment or benefit, including amount and schedule], which Employee acknowledges Employee would not otherwise be entitled to receive. Payment will be made [schedule], less applicable withholdings, beginning after the revocation period in section 7 has expired without revocation.

[Where the payment is being allocated, for example because the separation resolves a disputed claim: The payment will be allocated as follows: (a) $[amount] for alleged lost wages, less applicable withholdings, reported on IRS Form W-2; (b) $[amount] for alleged non-wage damages, reported on IRS Form 1099; and (c) $[amount] payable to [counsel] for attorneys' fees, reported as required by law. Neither party has made any representation regarding the tax treatment of any payment, and Employee is responsible for any taxes owed on amounts received.] Where the payment is straightforward severance for services, it is wages: report it on Form W-2 and withhold.

The payments under this Agreement are intended to be exempt from or comply with Section 409A of the Internal Revenue Code, and this Agreement will be interpreted accordingly. Each installment is a separate payment. If the period for signing and not revoking this Agreement spans two calendar years, payment will begin in the second calendar year.

3. Health coverage

Employee's coverage under the Company's group health plan will end on [date]. Employee and any covered dependents may be eligible to continue coverage under COBRA. The [Company / plan administrator] will send a separate COBRA election notice describing eligibility, the election period, premiums, and deadlines. This Agreement does not change any right under COBRA or under the plan. [If the Company will subsidize premiums: The Company will pay [describe] toward the cost of continuation coverage for [period].]

4. Release of claims

In exchange for the consideration in section 2, Employee releases the Company and its current and former officers, directors, employees, agents, parents, subsidiaries, and affiliates from all claims, known and unknown, that Employee has as of the date Employee signs this Agreement, arising out of or relating to Employee's employment or its ending.

This release includes, without limitation, any and all claims arising under the Age Discrimination in Employment Act of 1967, as amended (29 U.S.C. § 621 et seq.), including as amended by the Older Workers Benefit Protection Act; Title VII of the Civil Rights Act of 1964; the Americans with Disabilities Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act; [applicable state statutes]; and any claim in contract or tort.

This release applies only to claims that arose on or before the date Employee signs this Agreement. It does not waive any right or claim that may arise after that date.

5. What is not released

This Agreement does not release, and nothing in it limits:

• Any claim that cannot be released as a matter of law, including claims for unemployment or workers' compensation benefits, vested benefits under a retirement plan, and wage claims under the Fair Labor Standards Act to the extent they cannot be released privately.
• Any right to indemnification or coverage under a directors and officers policy that Employee otherwise has.
• Any right arising after the date Employee signs.
• The rights described in section 8.

6. Advice to consult an attorney, and the review period

• The Company advises Employee in writing to consult with an attorney of Employee's choosing before signing this Agreement.
• Employee has [21 / 45] days from the date Employee received this Agreement to consider whether to sign it. Employee may sign sooner, but is not required to. Changes to this Agreement, whether material or not, do not restart the [21 / 45]-day period.
• [For a group program, use 45 days and attach Exhibit A.] Attached as Exhibit A is the information required by 29 U.S.C. § 626(f)(1)(H) and 29 C.F.R. § 1625.22(f), including (a) the class, unit, or group of individuals covered by the program, the eligibility factors, and the time limits applicable; and (b) the job titles and ages of all individuals eligible or selected for the program and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected.

7. Revocation

Employee may revoke this Agreement within seven (7) days after signing it by delivering written notice of revocation to [name and title] at [address or email]. This Agreement will not become effective or enforceable, and no payments under section 2 will be made, until the seven-day revocation period has expired without revocation.

Nothing in this Agreement requires Employee to return any consideration received, or to pay any damages, costs, or fees, as a condition of challenging the validity of the release of claims under the Age Discrimination in Employment Act, and nothing in this Agreement limits Employee's right to bring such a challenge.

8. Rights Employee keeps

• Nothing in this Agreement prohibits or restricts Employee from reporting possible violations of law to, communicating with, filing a charge or complaint with, or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission, the National Labor Relations Board, the Securities and Exchange Commission, the Occupational Safety and Health Administration, or any other federal, state, or local government agency, without notice to or consent from the Company, or from receiving an award from a government-administered whistleblower program.
• Employee waives any right to personal monetary recovery from a charge Employee files or that is filed on Employee's behalf, except that this waiver does not apply to any award from a government-administered whistleblower program.
• Nothing in this Agreement prohibits Employee from disclosing or discussing conduct, or the existence of a dispute, relating to sexual harassment or sexual assault, or from disclosing any other conduct that Employee reasonably believes to be unlawful.
• Nothing in this Agreement is intended to, or will be applied to, interfere with, restrain, or coerce employees in the exercise of rights under Section 7 of the National Labor Relations Act, including the right to discuss wages, hours, and other terms and conditions of employment with coworkers or others, and the right to engage in concerted activity for mutual aid or protection.

9. Confidentiality of this Agreement

Employee agrees to keep the amount of the consideration in section 2 confidential, except that Employee may disclose it to Employee's spouse or domestic partner, attorney, tax adviser, and financial adviser, and as required by law. Confidential information does not include information about wages, hours, or other terms and conditions of employment, and nothing in this section prohibits Employee from discussing the terms of Employee's employment with coworkers, a labor organization, or the National Labor Relations Board, or from engaging in any other activity protected by Section 7 of the National Labor Relations Act. [Several states restrict or prohibit confidentiality of settlement terms where the claim involves harassment or discrimination. Check your state before including this section.]

10. Statements about the Company

Employee agrees not to make statements about the Company that are maliciously untrue or that Employee knows to be false and defamatory. This section does not restrict truthful statements about wages, hours, or working conditions, communications with any government agency, testimony under oath, or any activity protected by Section 7 of the National Labor Relations Act.

11. Return of property and confidential information

Employee will return all Company property and will continue to protect the Company's confidential information under [the Confidentiality and Invention Assignment Agreement dated [date] / section [X]], which remains in effect.

Notice of immunity under the Defend Trade Secrets Act. Under 18 U.S.C. § 1833(b), an individual is immune from criminal or civil liability under federal or state trade secret law for disclosing a trade secret (a) in confidence to a government official, directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (b) in a complaint or other document filed in a lawsuit or other proceeding, if the filing is made under seal. An individual who sues an employer for retaliation for reporting a suspected violation of law may disclose the trade secret to that individual's attorney and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret except pursuant to court order.

12. No admission

This Agreement is not an admission by the Company of any wrongdoing or liability, and the Company denies any.

13. Entire agreement and governing law

This Agreement is the entire agreement between the parties about its subject and replaces any earlier agreement about it, except any surviving confidentiality, invention assignment, or arbitration agreement identified in section 11. It is governed by the law of [state], without regard to conflicts of law. If any provision is held unenforceable, the rest remains in effect. This Agreement may be signed in counterparts.

14. In plain terms

By signing this Agreement, you are giving up the right to bring claims against the Company for anything that happened before you signed, including claims of age discrimination under the Age Discrimination in Employment Act. You are not giving up any right that the law does not allow you to give up, and you keep the rights described in section 8. You are being given something you would not otherwise receive in exchange. You have [21 / 45] days to think about it, you are advised to talk to an attorney first, and you can change your mind for seven days after you sign.

15. Acknowledgement

Employee has read this Agreement, understands it, and signs it voluntarily.

Employee signature: ______________________________

Printed name: ______________________________

Date signed: ______________________________

Company representative: ______________________________

Title: ______________________________

Date: ______________________________

Exhibit A — decisional unit disclosure (group programs only)

[Required under 29 U.S.C. § 626(f)(1)(H) whenever the release is offered to a group or class of employees. Complete it before the agreement is given to anyone; the 45-day period does not begin until the employee has this information. Delete this exhibit for an individual separation.]

Decisional unit: [the class, unit, or group of employees from which the Company chose the employees who were and were not selected for the program, for example "all employees in the Denver customer service department"].

Eligibility factors: [describe the criteria used to select employees for the program].

Time limits: [the date by which the agreement must be signed to receive the severance].

Job titles and ages: [a table listing each job title in the decisional unit, the number of employees in that title selected for the program with their ages, and the number in that title not selected with their ages. Ages, not birth dates.]

Template provided by DefensibleHR LLC. It is a drafting starting point, not a finished document, and it is not legal advice. It covers federal provisions only. State law changes the release language, the revocation period, and what may be kept confidential. Have a qualified employment attorney adapt it for your state before you use it.