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Voluntary Severance Agreement Template for United States

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Key Requirements PROMPT example:

Voluntary Severance Agreement

"I need a Voluntary Severance Agreement for a senior software engineer who is being offered 6 months' salary as severance, with an effective date of March 1, 2025, and I need to include non-compete provisions due to our proprietary technology."

Document background
A Voluntary Severance Agreement is utilized when an employer and employee mutually agree to end their employment relationship with additional benefits beyond final wages. This document is crucial in situations such as corporate restructuring, downsizing, or amicable separations. The agreement typically includes severance pay, benefits continuation, release of claims, and confidentiality provisions. In the United States, these agreements must comply with federal regulations such as ADEA, ERISA, and state-specific requirements. Special attention must be given to employees over 40, who are protected by the Older Workers Benefit Protection Act, requiring specific review periods and disclosures.
Suggested Sections

1. Parties: Identification of employer and employee, including full legal names and addresses

2. Background: Context of the separation and purpose of the agreement

3. Definitions: Key terms used throughout the agreement

4. Separation Date: Clear statement of employment termination date

5. Severance Payment: Amount, timing, and method of severance payment

6. General Release: Employee's release of claims against employer

7. Confidentiality: Terms regarding confidential information and trade secrets

8. Return of Company Property: Requirements for returning company assets

9. Governing Law: Jurisdiction and applicable law

Optional Sections

1. Non-Compete: Restrictions on future employment in competitive markets

2. Non-Solicitation: Restrictions on soliciting employees or customers to protect client relationships and workforce

3. Outplacement Services: Career transition assistance provisions

4. Reference Provision: Terms regarding future employment references and agreed communication approach

5. COBRA Continuation: Healthcare coverage continuation details and terms

Suggested Schedules

1. Schedule A - Severance Calculation: Detailed breakdown of severance payment calculation

2. Schedule B - Company Property List: Itemized list of company property to be returned

3. Schedule C - Benefits Summary: Summary of continued benefits and their duration

4. Appendix 1 - ADEA Disclosure: Required age discrimination disclosure for employees over 40

5. Appendix 2 - State-Specific Notices: Required state-specific legal notices and disclosures

Authors

Alex Denne

Head of Growth (Open Source Law) @ ºÚÁÏÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Industries

Age Discrimination in Employment Act (ADEA): Federal law requiring specific provisions for employees 40 or older, including mandatory review and revocation periods, and compliance with Older Workers Benefit Protection Act (OWBPA)

Title VII of the Civil Rights Act: Federal legislation governing discrimination claims releases and ensuring the agreement doesn't discriminate based on protected characteristics

Fair Labor Standards Act (FLSA): Federal law governing wage and hour considerations; certain wage claims cannot be waived in severance agreements

Employee Retirement Income Security Act (ERISA): Federal law governing impact on employee benefits and retirement plans in severance agreements

State Labor Laws: State-specific requirements for final wage payment, notice periods, and additional employee protections that vary by jurisdiction

State Unemployment Compensation Laws: State-specific regulations affecting employee eligibility for unemployment benefits after accepting severance

State Release Requirements: State-specific requirements for valid releases and consideration periods in severance agreements

Non-compete and Confidentiality Provisions: State-varying requirements and limitations on enforceability of non-compete and confidentiality clauses in severance agreements

WARN Act: Federal law requiring advance notification in cases of mass layoffs or plant closings, relevant if severance is part of larger reduction in force

COBRA: Federal requirements for continuation of healthcare coverage that must be addressed in severance agreements

Americans with Disabilities Act (ADA): Federal law ensuring protection of rights for employees with disabilities in severance situations

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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