Severance Agreements 101: Drafting Enforceable Provisions to Mitigate Employer Risk

This CLE webinar will provide new employment attorneys with an overview of how to draft enforceable severance agreements. The authoritative panel will discuss key pre-drafting considerations, including pertinent federal and state regulatory requirements that will determine what may be incorporated into the agreement. The panel will also address key provisions to be included and offer best practices for drafting.

Severance agreements in which severance payments and other valuable benefits are offered as consideration in exchange for an employee's release of claims against the employer are a valuable tool for employers to help mitigate the risk of future litigation. However, employment attorneys must understand what provisions should be included in the agreement and how to draft enforceable provisions, considering relevant federal, state, and local law requirements.

Many factors—both legal and situational—must be assessed before drafting even begins.

• In which jurisdiction(s) do the parties operate?
• State and/or local laws may add to the myriad federal requirements that govern employment-related agreements.
• Will the agreement be for an individual separating from the employer; is the individual part of a reduction in force (RIF)?
• Counsel should know how many employees are being affected by the termination to determine whether the federal WARN Act and/or state mini-WARN equivalents may be implicated.
• Are the employee(s) in question 40 years of age or older?
• Certain disclosure, consideration, and revocation requirements under the Older Workers Benefit Protection Act (OWBPA) and any potentially relevant state or local equivalents may need to be met.
• Are protective provisions that shield the parties from future conflict appropriate and allowable?
• Provisions that may or may not be appropriate include the waiver of future claims, non-disclosure clauses, and other restrictive covenants such as non-solicitation, non-disparagement, and noncompete clauses.
• Special considerations for public employers.
• Does a pending charge or legal proceeding also need to be addressed?
• Avoid mistaken attempts to have an employee agree to dismissal by a state or federal fair employment practices agency, and be aware of federal laws about assisting or reporting complaints to agencies.
• When these variables are understood and it's time to draft, avoid the pitfalls that can render an agreement unenforceable or—worse—lead to unintended consequences.
• Avoid boilerplate blunders.
• While vetted templates can be a useful starting place for crafting a comprehensive and enforceable agreement, overreliance on preexisting language can lead to sloppy mistakes and overlook an ever-changing state law landscape.
• Incorporate all relevant and permissible provisions to address your client's interests.
• A severance agreement might include a release of claims, certain restrictive covenants, non-disparagement provisions, language addressing the return of company property, incorporation of other pertinent agreements (including equity agreements), and the amount of severance to be paid and the process for distribution.
• Be prepared for a represented employee to push back on overbroad or unnecessary provisions (even if permissible) and know where there is and is not flexibility.
• Avoid claims of coercion or duress, and ensure mutual drafting provisions reflect some reality.

Listen as our authoritative panel provides employment attorneys with the basics of how to draft enforceable severance agreements.