Separation agreements are a common tool used by businesses to formalize the terms of an employee’s departure. These agreements typically include provisions addressing severance pay, benefits continuation, confidentiality, and a release of claims.
At the core of most separation agreements is the release of claims, where the employee agrees to waive certain legal rights in exchange for payment. This is usually in the form of severance pay or other benefits not otherwise owed. For the release to be enforceable, it must be knowing and voluntary, and it must comply with applicable federal and state laws. For example, agreements involving employees aged 40 and over must satisfy the requirements of the Older Workers Benefit Protection Act (“OWBPA”), which has specific timing, disclosure, and revocation requirements.
In addition to releases, separation agreements often include restrictive covenants such as confidentiality, non-disparagement, and, where permissible, non-solicitation or non-compete provisions. However, enforceability of these provisions varies significantly by jurisdiction. For instance, states like Oregon impose strict limitations on non-compete clauses. Employers must carefully tailor these provisions with state-specific language to ensure enforceability.
Both employers and employees should consider working with qualified legal counsel to ensure that the agreement is enforceable and aligned with their respective interests.
If you need legal guidance regarding separation agreements, please contact us at info@mnklawyers.com
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any action based on the information contained within this material