Employee Separation and Release Agreement Drafting Workflow

You are tasked with drafting a comprehensive Employee Separation and Release Agreement that protects the employer's interests while ensuring legal compliance and fairness to the departing employee. This is a critical transactional document that must balance multiple legal considerations including employment law, contract principles, and jurisdiction-specific requirements.

Initial Information Gathering

Begin by searching the user's uploaded documents to identify all relevant facts about this separation. You need to establish the complete factual foundation including the employee's name, position, tenure, reason for separation, proposed severance terms, any existing employment agreements or restrictive covenants, the employer's legal entity name and jurisdiction, and any specific circumstances that led to the separation. Look for employment contracts, offer letters, employee handbooks, prior correspondence, and any documents discussing the separation terms. Extract concrete details such as salary amounts, benefit descriptions, equity holdings, bonus entitlements, and accrued paid time off.

If the user's documents don't contain sufficient detail about standard market practices for severance multiples, COBRA continuation periods, or industry-specific considerations, supplement your research with current information about best practices and legal requirements. Pay particular attention to jurisdiction-specific mandates that may affect the agreement's terms.

Document Structure and Drafting Approach

Draft the agreement with the following comprehensive sections, ensuring each is tailored to the specific facts you've gathered:

Opening and Recitals: Establish the parties with complete legal names and addresses. The employer should be identified with its full corporate form and principal place of business. The employee should be identified with their residential address. Include a clear effective date for the separation and brief recitals explaining that the parties wish to resolve all matters relating to the employment relationship and its termination on mutually agreeable terms. The recitals should acknowledge the employee's service period and establish that this agreement supersedes any prior understandings.

Separation Terms and Final Compensation: Specify the exact separation date and confirm that employment terminates on that date. Detail all final compensation including unpaid salary through the separation date, accrued but unused vacation or paid time off (calculated according to company policy and state law requirements), any earned but unpaid bonuses or commissions, and reimbursement for approved business expenses. Address the immediate cessation of all employee benefits as of the separation date, except as specifically continued under the agreement. Include explicit requirements for the return of all company property including computers, mobile devices, access cards, keys, documents, files, and any other materials belonging to the employer. Specify the deadline and method for return.

Consideration and Severance Package: This section must clearly articulate what the employee receives in exchange for the releases and covenants in the agreement. Specify the total severance payment amount and payment schedule, making clear this is consideration beyond what the employee is already entitled to receive. If severance will be paid in installments, detail the payment dates and amounts. Address continuation of health insurance benefits, including the employer's offer to subsidize COBRA premiums for a specified period if applicable. Note any outplacement services, career counseling, or other transitional support being provided. Include any treatment of equity compensation, stock options, or restricted stock units according to the governing plan documents. Ensure the consideration is adequate and clearly stated as something of value beyond ordinary entitlelement to support the release of claims.

Release of Claims: Draft a comprehensive general release whereby the employee releases and discharges the employer, its affiliates, officers, directors, employees, agents, successors, and assigns from any and all claims, demands, causes of action, and liabilities of any kind arising from or relating to the employment relationship or its termination. The release should cover all claims whether known or unknown, including but not limited to claims under federal, state, and local employment laws such as Title VII, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, and state wage and hour laws. Explicitly include claims for wrongful termination, discrimination, harassment, retaliation, breach of contract, and any other employment-related claims.

If the employee is age 40 or older, include a specific release of claims under the Age Discrimination in Employment Act (ADEA) that complies with the Older Workers Benefit Protection Act (OWBPA). This requires specific language advising the employee to consult with an attorney, providing at least 21 days to consider the agreement (or 45 days if part of a group termination), and granting 7 days after execution to revoke the agreement. Include clear revocation instructions and specify that the agreement does not become effective or enforceable until the revocation period expires. Verify these requirements against current EEOC guidance and ensure strict compliance.

Carve out from the release any claims that cannot be waived as a matter of law, including the right to file a charge with the EEOC or similar agency (while waiving the right to monetary recovery), claims for unemployment or workers' compensation benefits, claims arising after the agreement's execution, and any rights to indemnification under corporate bylaws or applicable law.

Restrictive Covenants and Post-Employment Obligations: Include mutual non-disparagement provisions prohibiting both parties from making negative or derogatory statements about the other. The employee's covenant should extend to statements about the company, its officers, directors, and employees. The employer's covenant should run to its officers and directors regarding statements about the employee. Draft these provisions carefully to avoid restricting truthful testimony in legal proceedings or protected communications with government agencies.

Include a robust confidentiality provision requiring the employee to maintain the confidentiality of all proprietary and confidential information of the employer, including trade secrets, customer lists, business strategies, financial information, and other non-public information. This obligation should survive the termination of employment indefinitely or for the maximum period permitted by law. Require confidentiality regarding the terms of the separation agreement itself, with standard exceptions for disclosure to immediate family, attorneys, accountants, and tax advisors, or as required by law.

If applicable to the employee's role and enforceable under the governing state's law, include reasonable non-competition and non-solicitation covenants. Any non-compete must be carefully tailored to protect legitimate business interests and be reasonable in scope, geography, and duration according to the jurisdiction's standards. Research and cite the specific state law requirements for enforceability. Non-solicitation provisions should prohibit solicitation of the employer's customers, clients, and employees for a reasonable period, typically six months to two years depending on the employee's level and the jurisdiction.

Reaffirm any continuing obligations under prior confidentiality, invention assignment, or restrictive covenant agreements that survive termination of employment.

Cooperation and Non-Admission: Include a cooperation clause requiring the employee to reasonably cooperate with the employer in any pending or future litigation, investigations, or regulatory matters related to matters within the employee's knowledge or responsibility during employment. Specify that the employer will reimburse reasonable expenses and compensate time at a reasonable rate if cooperation is required after the separation date. Include a non-admission clause stating that the agreement does not constitute an admission of liability or wrongdoing by either party.

Governing Law and Dispute Resolution: Specify that the agreement is governed by the laws of the relevant state, identifying the specific jurisdiction. If the employer desires arbitration of disputes, include a carefully drafted arbitration provision specifying the arbitration rules (such as AAA Employment Arbitration Rules), the location of arbitration, the number of arbitrators, and the allocation of costs. Ensure any arbitration provision complies with applicable law and does not improperly restrict the employee's rights to pursue administrative remedies. Consider whether a forum selection clause or jury waiver is appropriate and enforceable in the jurisdiction.

General Provisions: Include standard but essential boilerplate provisions. A severability clause should provide that if any provision is found unenforceable, the remainder of the agreement remains in effect and the unenforceable provision should be modified to the minimum extent necessary to make it enforceable. An integration or entire agreement clause should state that this agreement constitutes the complete agreement between the parties regarding the separation and supersedes all prior understandings, representations, or agreements. An amendment provision should require that any modifications be in writing and signed by both parties. Include a waiver provision stating that failure to enforce any provision does not waive the right to enforce it later. Add a counterparts clause if appropriate, and a notice provision specifying how formal notices under the agreement must be delivered.

Execution and Acknowledgments: Provide signature blocks for both the employee and an authorized representative of the employer, with dates. Include an acknowledgment section where the employee confirms they have read and understood the agreement, have had the opportunity to consult with an attorney, are entering into it voluntarily, and understand the rights being released. If the ADEA release applies, include the specific OWBPA acknowledgments regarding the 21-day (or 45-day) consideration period and 7-day revocation right, with clear instructions on how to exercise the revocation right.

Final Review and Compliance Verification

Before finalizing the document, verify compliance with all applicable legal requirements. Confirm that the ADEA waiver provisions, if applicable, strictly comply with OWBPA requirements based on current EEOC guidance. Verify that any restrictive covenants are enforceable under the governing state's law by researching recent case law and statutory requirements. Ensure the consideration is adequate and clearly exceeds what the employee would otherwise be entitled to receive. Confirm that all required disclosures and acknowledgments are included. Review the release language to ensure it is sufficiently broad while including necessary carve-outs for non-waivable claims.

Once you have gathered all necessary information from the user's documents and any supplemental research, and have verified all legal compliance requirements, create a polished, professional Employee Separation and Release Agreement that is ready for attorney review and execution. The document should be comprehensive, legally sound, and tailored to the specific circumstances of this separation while protecting the employer's legitimate interests.