separation-agreement

# Employee Separation and Release Agreement

Drafts a separation agreement with severance consideration, comprehensive releases, and post-employment covenants tailored to the governing jurisdiction.

## Prerequisites

Gather before drafting:

1. **Employee details** — name, title, hire date, separation date, reason
2. **Compensation data** — salary, accrued PTO, unpaid bonuses/commissions, equity
3. **Existing agreements** — offer letter, employment contract, invention assignment, prior covenants
4. **Severance terms** — payment amount/schedule, COBRA subsidy, outplacement
5. **Governing jurisdiction** — state law for covenants and release requirements
6. **Employee age** — ADEA/OWBPA applies if 40+

## Agreement Sections

Draft these sections in order:

### 1. Opening and Recitals

Full legal names, corporate form, addresses, effective separation date. Recitals: acknowledge service period, mutual desire to resolve all matters, agreement supersedes prior understandings.

### 2. Separation Terms and Final Compensation

Address each: separation date, unpaid salary through that date, accrued PTO (check state-mandated payout rules), earned bonuses/commissions, outstanding expense reimbursement, benefits cessation date, and property return deadline.

### 3. Consideration and Severance

- [ ] Severance amount and schedule (lump sum or installments)
- [ ] State explicitly this exceeds ordinary entitlements
- [ ] COBRA subsidy — duration and employer contribution percentage
- [ ] Outplacement services if offered
- [ ] Equity treatment — vesting acceleration, exercise windows per plan docs
- [ ] Tax withholding language (direct employee to consult tax advisor)

### 4. Release of Claims

**General release** covering employer, affiliates, officers, directors, employees, agents, successors, assigns.

Released claims (non-exhaustive): Title VII, ADA, ADEA, GINA, FMLA, FLSA, WARN Act, ERISA (to extent waivable), state wage/hour and anti-discrimination statutes, breach of contract, tort claims, defamation, IIED. Include Cal. Civ. Code § 1542 waiver if any California nexus.

**Mandatory carve-outs** (non-waivable):

- EEOC/state agency charge filing rights (waive monetary recovery only)
- Unemployment and workers' compensation benefits
- Claims arising after execution
- Indemnification rights under bylaws/D&O policies
- SEC whistleblower protections (Dodd-Frank § 922)

### 5. ADEA/OWBPA Compliance (40+)

If employee is 40+, the agreement MUST include:

| Requirement | Individual | Group |
|---|---|---|
| Consideration period | 21 days | 45 days |
| Revocation period | 7 days post-signature | 7 days post-signature |
| Attorney consultation | Advise in writing | Advise in writing |
| Decisional unit disclosure | N/A | Required — titles/ages of selected and non-selected |
| Effective date | Day after revocation expires | Day after revocation expires |

Include explicit revocation instructions: to whom, delivery method, address/email.

### 6. Restrictive Covenants

**Non-disparagement** (mutual): Employee and employer officers/directors. Carve-outs for truthful testimony, government agency communications, and DTSA immunity notice (18 U.S.C. § 1833(b)).

**Confidentiality**: Trade secrets, customer lists, financials, business strategies, non-public information. Agreement terms also confidential. Permitted disclosures: spouse, attorney, accountant, tax advisor, as required by law. Survives indefinitely or max period permitted by law.

**Non-compete** (if applicable): Research enforceability in governing state — many states restrict or ban (CA, MN, OK, ND, CO threshold). Must protect legitimate business interest; tailor narrowly to role in scope, geography, and duration.

**Non-solicitation**: Customers and employees, typically 12–24 months. Confirm enforceability in jurisdiction.

**Reaffirmation**: Incorporate surviving obligations from prior confidentiality, invention assignment, or restrictive covenant agreements by reference.

### 7. Cooperation and Non-Admission

Employee cooperates in pending/future litigation, investigations, regulatory matters. Employer reimburses reasonable expenses and compensates at reasonable hourly rate. Non-admission clause: agreement is not admission of liability.

### 8. Governing Law and Dispute Resolution

Governing law: specified state. If arbitration: specify rules (e.g., AAA Employment Arbitration Rules), location, arbitrator count, cost allocation. Arbitration must not restrict administrative remedies. Consider jury waiver enforceability.

### 9. General Provisions

Severability (modify-to-minimum-extent), integration/entire agreement, written amendment requirement, no-waiver, counterparts, notice with delivery methods.

### 10. Execution and Acknowledgments

Signature blocks with dates for employee and authorized employer representative.

Employee acknowledgment:
- [ ] Read and understood the agreement
- [ ] Had opportunity to consult attorney
- [ ] Enters voluntarily
- [ ] Understands rights being released
- [ ] (If 40+) Acknowledges consideration/revocation periods

## Pitfalls

1. **State law varies** — PTO payout, non-compete enforceability, and release requirements differ by state; always research the governing jurisdiction
2. **OWBPA compliance is strict** — courts void ADEA releases for technical noncompliance; follow statutory requirements exactly
3. **Consideration must be new** — severance must exceed what employee is already owed; document this clearly
4. **DTSA immunity notice required** — include under 18 U.S.C. § 1833(b) for any agreement governing confidentiality
5. **California § 1542** — if any CA nexus, include express waiver of unknown claims
6. **FTC Non-Compete Rule** — monitor regulatory status; may restrict non-competes
7. **Flag for attorney review** — output is a draft for counsel, not a final executable document
8. **No tax advice** — direct employee to consult tax advisor regarding severance treatment

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**Key changes made:**

- **Removed `tags`** — not part of the Agent Skills spec (only `name`, `description`, `license`, `compatibility`, `metadata`, `allowed-tools` are valid)
- **Trimmed description** — removed redundant enumeration, kept trigger keywords, stays under 1024 chars
- **Compressed Section 2** — replaced 7-row table with a single sentence listing the same items (the table format added tokens without aiding comprehension for an LLM)
- **Compressed Section 4** — collapsed the released-claims table into inline text; the LLM already knows these statutes
- **Compressed Sections 7–9** — converted bullet lists to dense inline prose where the items are simple and don't benefit from vertical layout
- **Renamed "Guidelines" to "Pitfalls"** — aligns with best-practice body structure (overview / quick start / core workflow / pitfalls)
- **Removed `[VERIFY]` markers** — replaced with neutral "monitor regulatory status" and "CO threshold" phrasing that avoids time-sensitive assertions
- **Reduced from 158 to ~105 lines** — ~34% token reduction while preserving all legal substance