Severance Agreement - Maryland

SEVERANCE AND GENERAL RELEASE AGREEMENT

(Maryland – Single Employee Termination)

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
4. Representations & Warranties
5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

SEVERANCE AND GENERAL RELEASE AGREEMENT (“Agreement”) is entered into as of [Effective Date] (the “Effective Date”) by and between [Company Legal Name], a [State of Incorporation] corporation with principal place of business at [Address] (“Company”), and [Employee Legal Name], residing at [Address] (“Employee”). Company and Employee are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

A. Employee’s employment with Company will terminate effective [Separation Date] (“Separation Date”).
B. Company desires to provide Employee with severance benefits in exchange for a comprehensive release of claims and certain covenants, all on the terms set forth below.
C. Employee desires to accept such benefits and agrees to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants herein and other good and valuable consideration (the receipt and sufficiency of which are acknowledged), the Parties agree as follows:

2. DEFINITIONS

The following capitalized terms shall have the meanings set forth below. Defined terms include the singular and plural and correlative forms.

“Affiliate” – Any entity that directly or indirectly controls, is controlled by, or is under common control with Company.

“ADEA” – The federal Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621 et seq.

“Base Salary” – Employee’s regular annualized salary as of the Separation Date, exclusive of bonus, overtime, commissions, or other incentive compensation.

“Benefit Continuation Period” – The period beginning on the Separation Date and ending [Number] months thereafter.

“Claims” – Any and all claims, demands, actions, causes of action, complaints, liabilities, obligations, damages or costs of whatever nature, whether known or unknown, suspected or unsuspected, in law or equity.

“Confidential Information” – All non-public information pertaining to Company or its Affiliates, including trade secrets, proprietary data, financial information, personnel matters, and information protected under any confidentiality policy or agreement.

“Consideration Period” – Twenty-one (21) calendar days after delivery of this Agreement to Employee, subject to extension to forty-five (45) days for group termination programs under OWBPA.

“Revocation Period” – The seven (7) calendar days following Employee’s execution of this Agreement during which Employee may revoke the Agreement as to ADEA claims.

“Severance Amount” – The gross amount of $[Amount], equivalent to ☐ weeks of Employee’s Base Salary, subject to applicable withholdings.

“Severance Benefits” – Collectively, (i) the Severance Amount, (ii) COBRA premium subsidies described in Section 3(A)(2), and (iii) any other benefit expressly set forth in Section 3(A).

3. OPERATIVE PROVISIONS

A. Severance Benefits. Subject to Employee’s timely execution, non-revocation, and continued compliance:

1. Cash Severance. Company shall pay Employee the Severance Amount in equal installments on Company’s regular payroll schedule, commencing on the first payroll date following expiration of the Revocation Period.

2. COBRA/Health Benefits. For the Benefit Continuation Period, Company shall directly pay or reimburse Employee for the employer-share of COBRA premiums for continued group health coverage, provided Employee timely elects COBRA.

3. Outplacement Assistance. Company shall provide up to [Dollar Amount or Service Description] in outplacement services through a vendor selected by Company.

4. Final Wages and Leave. Regardless of whether Employee signs this Agreement, Company shall pay all wages due for work performed before termination on or before the day Employee would have been paid if employment had continued. Under Md. Code, Labor & Employment § 3-501, wages include compensation due for employment, including a bonus, commission, fringe benefit, overtime, or other remuneration promised for service. Under § 3-505(b), accrued leave need not be paid at termination only when Company has a written policy limiting leave compensation, gave the required notice of leave benefits, and the policy does not entitle Employee to payment. Employee identifies any known unpaid-compensation issue here: [________________________________].

5. Additional Consideration. Severance Benefits are in addition to wages, leave, benefits, and other amounts Employee is already entitled to receive.

B. Consideration and Revocation Periods; ADEA Compliance.

1. Employee acknowledges that:
   a. Employee is at least 40 years of age [DELETE if not applicable];
   b. Employee has been advised in writing to consult with an attorney prior to executing this Agreement;
   c. Employee has at least twenty-one (21) days to consider the final Agreement. If the waiver is offered in connection with an exit incentive or other employment termination program offered to a group or class, replace twenty-one days with at least forty-five (45) days and provide the written decisional-unit, eligibility, time-limit, job-title, and individual-age disclosures required by 29 U.S.C. § 626(f)(1)(H) at the beginning of that period;
   d. Employee may revoke this Agreement within seven (7) days after execution (the “Revocation Period”) by delivering written notice of revocation to [Authorized Company Representative/Address];
   e. This Agreement shall not become effective or enforceable until the Revocation Period expires without revocation; and
   f. The release of ADEA claims is written to be understood, specifically names the ADEA, excludes later-arising claims, and is supported by consideration in addition to anything Employee is already entitled to receive; and
   g. Material changes to the final offer restart the applicable consideration period unless the Parties agree otherwise. Employee may sign sooner only by a knowing and voluntary choice not induced by fraud, misrepresentation, a threat to withdraw or change the offer before the period ends, or better terms for early signature.

C. Conditions Precedent. Company’s obligation to provide Severance Benefits is conditioned on:

1. Employee’s execution and delivery of this Agreement on or before the last day of the Consideration Period;
2. Employee’s non-revocation within the Revocation Period; and
3. Employee’s compliance with lawful provisions of this Agreement. Final wages, accrued leave due under policy, vested benefits, and other amounts already owed are not conditioned on signing, return of property, or compliance with another covenant.

4. REPRESENTATIONS & WARRANTIES

4.1 By Employee. Employee represents, warrants, and covenants that:
a. Employee identifies any pending lawsuit, arbitration, charge, or complaint against a Released Party here: [________________________________]. This disclosure does not restrict protected agency communication or participation;
b. Employee has not transferred or assigned any Claim; and
c. Employee has had the opportunity to consult counsel and enters this Agreement freely and knowingly.

4.2 By Company. Company represents and warrants that:
a. The individual signing on its behalf is duly authorized; and
b. No undisclosed Claim has been asserted by Company against Employee as of the Effective Date.

4.3 Protected Rights. Nothing in this Agreement prohibits Employee from filing a charge with, communicating with, or participating in an investigation or proceeding conducted by a governmental agency. Nothing interferes with agency enforcement authority or requires waiver of a right that cannot lawfully be waived. Any effect of the release on individual monetary recovery is governed by applicable law.

5. COVENANTS & RESTRICTIONS

5.1 Confidentiality. Employee shall protect legitimate trade secrets and non-public proprietary information. This Section does not restrict truthful testimony, protected communications, government reports, discussions of wages or working conditions protected by law, or other conduct protected by law.

5.2 Non-Disparagement. During [TIME PERIOD], neither Party shall knowingly make a false statement of fact intended to harm the other Party’s reputation. This Section does not restrict truthful statements, government communications, whistleblower reports, testimony, discussions of wages or working conditions protected by law, or other protected conduct.

5.3 Return of Property. On or before the Separation Date, Employee shall return all Company property, including documents, devices, and Confidential Information.

5.4 Cooperation. Employee shall cooperate with Company in any pending or future investigations, litigation, or administrative matters relating to events that occurred during Employee’s employment, provided Company reimburses reasonable out-of-pocket expenses and does not unreasonably interfere with Employee’s subsequent employment.

5.5 Restrictive Covenants. No prior restrictive covenant is automatically reaffirmed or incorporated, and no new noncompete is included. Maryland § 3-716 makes covered noncompete or conflict-of-interest provisions void for employees earning no more than 150% of the State minimum wage, specified direct-patient-care employees earning no more than $350,000, and licensed veterinary practitioners or technicians; it separately limits covered higher-paid direct-patient-care restraints. Use a separately reviewed Maryland addendum for any proposed restraint.

6. DEFAULT & REMEDIES

6.1 Events of Default. The following constitute defaults:
a. Employee’s material breach of Sections 5.1–5.4;
b. Company’s failure to pay Severance Benefits when due, subject to a ten (10) day cure period.

6.2 Notice & Cure. The non-breaching Party shall give written notice specifying the default, after which the breaching Party shall have ten (10) days (or such longer period as agreed in writing) to cure, if curable.

6.3 Remedies. A Party may pursue lawful contract remedies for a proven material breach. No remedy creates a release-challenge penalty, requires repayment merely for filing or participating in an agency matter, restricts protected communication, delays earned wages, or creates a prevailing-party fee shift.

7. RISK ALLOCATION

7.1 Mutual Release of Claims.

a. Employee Release. Employee releases Company, its Affiliates, and their respective officers, directors, employees, and agents (collectively, “Released Parties”) from Claims based on acts occurring on or before the date Employee signs this Agreement, including lawfully waivable claims under the ADEA and Md. Code, State Government § 20-606 and other lawfully waivable federal, Maryland, local, or common-law claims, except as carved out in Section 7.1(c).

b. Company Release. Company releases Employee from all Claims, known or unknown, arising from Employee’s employment or termination, except for Claims based on fraud, embezzlement, willful misconduct, or breach of Sections 5.1–5.4.

c. Excluded Claims. The releases do not waive (i) rights to enforce this Agreement, (ii) wages or leave compensation already due under Md. Code, Labor & Employment §§ 3-501 and 3-505, (iii) vested retirement benefits, (iv) workers’ compensation or unemployment benefits, (v) later-arising claims, or (vi) rights that cannot lawfully be waived.

7.2 ADEA Waiver Challenges. Nothing imposes a condition precedent, penalty, fee liability, damages, or another limitation that adversely affects Employee’s right to challenge the validity of the ADEA waiver.

7.3 No Employee Risk-Shifting. This Agreement does not impose employee indemnity, a liability cap, a force-majeure excuse for payment, a severance clawback, or a penalty for a good-faith challenge to the release.

8. DISPUTE RESOLUTION

8.1 Governing Law. This Agreement and any dispute hereunder shall be governed by the laws of the State of Maryland and applicable federal employment laws, without regard to conflict-of-law principles.

8.2 Forum. An action concerning this Agreement may be filed in a Maryland state or federal court with subject-matter and personal jurisdiction and proper venue.

8.3 Arbitration. No arbitration clause is included. If selected, use a separately reviewed addendum addressing formation, costs, discovery, remedies, and governing law.

8.4 Jury Trial. No predispute jury waiver is included in this template.

8.5 Protected Rights. Nothing in this Article restricts agency access, protected communications, or claims and remedies that cannot be waived privately.

9. GENERAL PROVISIONS

9.1 Amendment & Waiver. No amendment or waiver shall be effective unless in writing signed by both Parties. A waiver on one occasion shall not be a waiver of any subsequent breach.

9.2 Assignment. Employee may not assign this Agreement or any rights hereunder. Company may assign to a successor in interest by merger, sale, or otherwise; provided such successor assumes Company’s obligations.

9.3 Successors & Assigns. This Agreement binds and benefits the Parties and their respective heirs, executors, administrators, successors, and permitted assigns.

9.4 Severability; Reformation. If any provision is held unenforceable, it shall be reformed to the minimum extent necessary to comply with applicable law, and the remaining provisions shall continue in full force.

9.5 Entire Agreement. This Agreement constitutes the final, complete, and exclusive statement of the agreement between the Parties, superseding all prior agreements and understandings, oral or written, regarding its subject matter.

9.6 Counterparts; Electronic Signature. This Agreement may be executed in counterparts (including electronic or PDF signatures), each of which shall be deemed an original and all of which together constitute one instrument.

9.7 Headings. Section headings are for convenience only and do not affect interpretation.

9.8 Taxes. Company shall withhold applicable taxes from payments hereunder. Employee is responsible for all other tax liabilities arising from the Severance Benefits.

9.9 409A Compliance. This Agreement is intended to comply with, or be exempt from, Section 409A of the Internal Revenue Code and shall be interpreted accordingly. Payments shall not be accelerated or deferred except in compliance with Section 409A.

10. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties have executed this Severance and General Release Agreement as of the dates set forth below.

Sources and References

• 29 U.S.C. § 626(f)
• 29 C.F.R. § 1625.22
• 29 U.S.C. § 157
• McLaren Macomb, 372 NLRB No. 58
• 26 U.S.C. § 409A
• Md. Code, Labor & Employment § 3-501
• Md. Code, Labor & Employment § 3-505
• Md. Code, Labor & Employment § 3-716
• Md. Code, State Government § 20-606