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Employee Separation and Release Agreement

employee-separation-release

Drafts U.S. employee separation and release agreements exchanging severance consideration for a comprehensive release of employment-related claims, with OWBPA/ADEA compliance, COBRA terms, confidentiality, and post-employment obligations. Use when preparing separation agreements, severance packages, termination releases, or settling employment claims.

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Full skill instructions

Employee Separation and Release Agreement

Drafts a severance-backed agreement resolving employment-related claims and establishing post-employment obligations under U.S. law.

Prerequisites

Gather before drafting:

  • Employer entity, address, authorized signatory
  • Employee name, address, title, start date, separation date
  • Separation reason; disputed issues or pending claims
  • Final pay: wages through separation, PTO/​vacation payout, bonuses/​commissions, expense reimbursements
  • Severance: amount, schedule, method, conditions
  • Benefits: COBRA notice timing, any employer subsidy
  • Equity treatment: options/​RSUs/​units and governing plan docs
  • Existing agreements: confidentiality/​IP, noncompete, non-solicit, arbitration
  • Governing law, forum, dispute resolution preference
  • Employee age; whether part of a group termination (OWBPA disclosure data if applicable)
  • Company property inventory and return process

Workflow

  1. Build a fact sheet from prerequisites; confirm missing items with the user.
  2. Assemble agreement sections in the order below.
  3. Insert optional clauses where triggered.
  4. Run the compliance checklist and correct gaps.

Section Order

#SectionKey Content
1Opening and RecitalsParties, effective date, separation context; keep factual, non-admission
2Separation TermsLast day, final wages, PTO payout, commissions/​bonuses, expense reimbursements; tie to state law
3Return of PropertyItems, deadline, certification of return, access revocation
4ConsiderationSeverance amount/​schedule, benefits subsidy, outplacement, equity; must exceed existing entitlements
5Release of ClaimsGeneral release of known/​unknown federal, state, and local employment claims
6Carve-outsNon-waivable claims, agency charges, post-signing claims, unemployment, workers' comp, indemnification
7OWBPA (age 40+)ADEA-specific release; 21-day (individual) or 45-day (group) review period + 7-day revocation
8ConfidentialityCompany confidential info + agreement terms; include DTSA immunity notice if trade secrets involved
9Non-DisparagementMutual; carve out protected activity and truthful testimony
10Restrictive CovenantsReaffirm prior agreements; add new only if enforceable under governing law
11CooperationReasonable post-separation cooperation with cost reimbursement
12Non-AdmissionNo liability admission
13Dispute ResolutionGoverning law, forum, arbitration if chosen; preserve agency charge rights
14General ProvisionsSeverability, entire agreement, amendments, waiver, notices, counterparts
15Execution and AcknowledgmentsSignatures, voluntary assent, counsel advisement, OWBPA acknowledgments

Optional Clauses

Insert only when triggered:

  • Noncompete — if enforceable under governing law and role justifies it
  • No rehire — if employer policy requires it
  • Nondisclosure of terms — if standard in the jurisdiction
  • 409A compliance — if severance extends beyond short-term deferral safe harbor

Compliance Checklist

  • Severance clearly identified as consideration beyond what is already owed
  • Final pay timing and PTO payout conform to governing state's requirements
  • OWBPA notice includes correct review period (21 vs. 45 days) and 7-day revocation
  • For group terminations: OWBPA disclosure of decisional unit, job titles, ages of eligible/​ineligible employees attached
  • Release carve-outs preserve right to file agency charges and non-waivable statutory claims
  • Arbitration clause (if used) does not waive non-waivable statutory remedies
  • No noncompete/​non-solicit in states that prohibit or severely restrict them
  • DTSA whistleblower immunity notice included when trade secrets are covered
  • Confidentiality and non-disparagement terms do not restrict truthful testimony or protected activity
  • Wage claim release (if included) meets enforceability requirements in governing jurisdiction
  • Plain language used for consideration description, timelines, and revocation instructions

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