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Company Separation Agreement Template for United States

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Key Requirements PROMPT example:

Company Separation Agreement

"I need a Company Separation Agreement for a senior software engineer leaving our tech startup voluntarily on March 15, 2025, including a 3-month non-compete clause and standard severance package with equity considerations."

Document background
The Company Separation Agreement serves as a crucial legal instrument when employment relationships end in the United States. This document is typically used during voluntary departures, layoffs, or negotiated exits, providing both parties with clarity and protection. The agreement outlines severance packages, continues certain benefits, and includes mutual releases to prevent future litigation. It must comply with various federal regulations, including the Age Discrimination in Employment Act and state-specific employment laws. When properly executed, a Company Separation Agreement helps mitigate risks for both employer and employee while ensuring a smooth transition process.
Suggested Sections

1. Parties: Identification of the employer and employee entering into the agreement

2. Background/Recitals: Brief description of employment history and circumstances leading to separation

3. Definitions: Key terms used throughout the agreement including Separation Date, Effective Date, and other defined terms

4. Separation Date: Specific date employment ends and final day of work, including details about final duties

5. Severance Payment: Details of any severance compensation, payment schedule, and tax implications

6. Release of Claims: Employee's comprehensive waiver of legal claims against the employer and affiliated entities

7. Confidentiality: Obligations regarding company confidential information and trade secrets

8. Return of Company Property: Requirements and timeline for returning company assets, materials, and data

Optional Sections

1. Non-Compete: Restrictions on future employment in competing businesses for a specified period and geographic area

2. Non-Solicitation: Restrictions on soliciting employees, customers, or vendors for a specified period

3. Outplacement Services: Details of career transition assistance and support services provided

4. References: Agreement on how future employment references will be handled and points of contact

5. Equity/Stock Options: Treatment of outstanding equity compensation including vesting and exercise provisions

6. Benefits Continuation: Details about post-employment benefits including health insurance and COBRA rights

Suggested Schedules

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

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

3. Schedule C - Equity Holdings: Summary of outstanding equity positions and their post-separation treatment

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

5. Appendix 2 - Benefits Summary: Detailed outline of post-employment benefits continuation and terms

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 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 considerations for employees over 40, including mandatory language and specified time periods for review and revocation of separation agreements

Older Workers Benefit Protection Act (OWBPA): Federal law that establishes specific requirements for valid waivers of age discrimination claims in separation agreements

Title VII of the Civil Rights Act: Federal law governing discrimination waivers in separation agreements, covering race, color, religion, sex, and national origin discrimination

Americans with Disabilities Act (ADA): Federal law that must be considered when addressing disability-related claims in separation agreements

Fair Labor Standards Act (FLSA): Federal law governing wage and hour claims that must be addressed in separation agreements

Employee Retirement Income Security Act (ERISA): Federal law governing benefits-related provisions that must be properly addressed in separation agreements

National Labor Relations Act (NLRA): Federal law protecting workers' rights to engage in protected concerted activity, which must be considered in separation agreement terms

State Employment Laws: Various state-specific employment laws that may affect the terms and enforceability of separation agreements in different jurisdictions

State Release Requirements: State-specific requirements for valid release of claims in separation agreements

State Non-Compete Laws: State-specific regulations governing the enforceability and terms of non-compete provisions in separation agreements

State Final Wage Payment Laws: State-specific requirements regarding timing and method of final wage payments in employment separation

State Vacation/PTO Payout Laws: State-specific requirements regarding the payment of accrued vacation or PTO upon employment separation

Internal Revenue Code Section 409A: Federal tax law governing deferred compensation arrangements that must be considered in separation agreement payment structures

Securities Laws: Federal and state laws governing the treatment of stock options and other securities in separation agreements

Defend Trade Secrets Act: Federal law that must be considered when drafting confidentiality and trade secret provisions in separation agreements

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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