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Severance Agreements

Miles & Stockbridge’s management clients require sophisticated advice on drafting severance agreements and crafting severance clauses that address the needs and concerns of all parties.  Our lawyers regularly advise on the proper construction of severance agreements in the termination of management, executive, and lower level employees, and we counsel employers in meeting the requirements of state and federal laws when entering such agreements, including the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit Protection Act (OWBPA).

Severance agreements typically require an employee’s release or waiver of statutory discrimination claims, but if the waiver is not worded precisely, does not allow the legally-prescribed period of time for consideration, or fails to meet other legal requirements, the client can be confronted with an employee lawsuit or Equal Employment Opportunity Commission (EEOC) investigation, or both.  We understand these circumstances and regularly advise clients on statutory requirements that employers’ severance agreements must satisfy so that waivers are clear and enforceable.  We also prepare model severance agreements that provide legally sufficient releases, customized to meet clients’ individual needs.  In special circumstances, such as the termination of high-level employees who have been charged but not yet convicted of crimes, we discreetly devise safeguards for the protection of our clients’ interests.

Severance agreements typically include numerous provisions, and we use our substantial experience with employers of all sizes and types to advise clients on practical and beneficial terms and conditions in such agreements, including:

  • Payments in recognition of service;

  • Outplacement assistance;

  • ERISA and COBRA considerations involving pension and welfare benefit plans;Mutual non-disparagement;

  • Maintenance of the employer’s trade secrets and confidentiality

  • Accrual and payment of sick, vacation, and incentive pay; and

  • Logistics for canceling computer system access, collecting company property, removing personal belongings, and observing the final termination date.