If a former employee challenges the validity of a separation agreement (and the important release of claims in that document), the usual theory is that they did not enter the agreement “knowingly and voluntarily,” says employment law attorney David Monks (dmonks@fullerlawgroup.co) of Fuller Law Group P.C. in San Diego, California.

Taking the air out of that argument requires using proper language in the agreement and a proper process for presenting the agreement to the employee.

• Use plain English. Words like “therein,” “heretofore,” and “said” (instead of “such”) are distracting and unhelpful.
• Be concise. You should be able to get everything you want with four to six pages.
• Give something of value. For a valid contract, each party must get valuable consideration. For the employee, that is typically money that they are not already entitled to receive. In other words, do not hold final earned wages hostage in order to compel the employee to sign the release.
• In the section for releasing claims, clearly and broadly describe the kinds of claims being released. It helps to include references to specific federal and state laws that are commonly part of employee lawsuits, such as Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act (ADEA) (for employees aged 40 and over), and similar state laws.
  
• Identify the kinds of claims that are not released. These can vary from state to state, but generally an employee, in a severance agreement, cannot release claims for worker’s compensation benefits, unemployment benefits and disability benefits.
• Include a provision in which the employee waives the benefit of a law that limits the scope of releases. Some states, like California (Civil Code section 1542), have laws that limit the scope of a release to include only claims currently known to the employee. For the release agreement to encompass unknown potential claims as well, the employee must specifically waive their rights under that law.
• Give the employee ample time to consider the severance offer and terms. Evidence of duress or coercion will seriously harm the employer’s ability to enforce the separation agreement. For a release of age-discrimination claims under the ADEA, an employee must receive 21 days to consider signing the agreement and then seven days to revoke their consent. For releases by employees under age 40, it’s a good idea to give at least five days to consider and two days to revoke. Check for specific requirements in your state.
• If the employee’s primary language is not English, have the agreement translated into their primary language.

A solid release agreement will give your company peace of mind. It’s worth the investment of time to ensure that it is as good as it can be.

Include all the details of the agreement, says Roz Gamble, VP of Corporate Operations & HR. For example, specify the date of mutual separation, and detail all monies owed including hours worked, OT, holiday pay, accrued vacation pay, and expense reimbursement.

In addition, include a section on known and unknown claims as well as a confidentiality agreement and a mutual non-disparaging agreement. Also, if appropriate, include a section from the employee handbook regarding any applicable violation.

Separation agreements are legal documents and should be reviewed by an employment law attorney, says HR Manager Margaret Hawkins.

A separation agreement sets out the contractual understanding between the employer and the separated employee. If severance is involved, make sure that you provide the appropriate number of days to accept, sign and revoke the agreement. Make sure to adjust time frames for employees over and under the age of 40. Ensure the agreement contains all separation details, including severance amount, has a confidentiality clause and is explicit in stating that the employee is giving up the right to take legal action against the company by signing the agreement.

A severance agreement is a contractual agreement where an employer pays an exiting employee in exchange for the release of future claims against an employer, explains VP of HR Jackie Plunkett. Due to the nature of the agreement, it is wise to have an employment attorney review a template annually to ensure the proper laws are cited.

There are differences in agreements depending on the age of the employee and whether the severance is from a reduction in force (RIF) or not. For this reason, you would have four templates:

• under 40 non-RIF
• over 40 non-RIF
• under 40 RIF, and
• over 40 RIF.

Each would have different consideration periods (seven to 45 days, depending on the agreement in accordance with OWBPA).

Agreements for those over 40 would include ADEA acknowledgments and RIF agreements for those over 40 would include a schedule of all impacted workers.