Severance Agreement - Maine

SEVERANCE AND MUTUAL RELEASE AGREEMENT

(Maine – Single Employee Separation)

TABLE OF CONTENTS

1. Document Header
2. Definitions

3. Operative Provisions
   3.1 Separation & Effective Date
   3.2 Severance Benefits & Consideration
   3.3 Final Wages, Vacation, and Statutory Severance
   3.4 Taxes & Withholdings

4. Representations & Warranties

5. Covenants & Restrictions
   5.1 Confidentiality
   5.2 Non-Disparagement
   5.3 Return of Employer Property

6. Default & Remedies

7. Risk Allocation
   7.1 Mutual Release of Claims
   7.2 Protected Rights
   7.3 No Employee Risk-Shifting
   7.4 ADEA-Specific Waiver

8. Dispute Resolution

9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

This Severance and Mutual Release Agreement (the “Agreement”) is entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between [EMPLOYER LEGAL NAME], a [STATE] [corporation/LLC/etc.] with a principal place of business at [ADDRESS] (“Employer”), and [EMPLOYEE FULL LEGAL NAME], residing at [ADDRESS] (“Employee”). Employer and Employee are each a “Party” and collectively the “Parties.”

Recitals
A. Employee’s employment with Employer will terminate effective [SEPARATION DATE] (“Separation Date”).
B. Employer desires to provide, and Employee desires to accept, certain severance benefits in exchange for Employee’s promises herein.
C. The Parties intend this Agreement to resolve fully and finally all matters between them, subject to the exclusions expressly set forth below.

2. DEFINITIONS

For ease of reference, the following capitalized terms have the meanings set forth below. Defined terms appear alphabetically.

“Agreement” – as defined in the preamble.
“ADEA” – the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq.
“Claims” – any and all actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands whatsoever, in law or in equity.
“Confidential Information” – all non-public information belonging to or regarding Employer or its affiliates, including trade secrets, financial data, personnel information, customer lists, and proprietary technology.
“Consideration Period” – (i) 21 days for an individual termination; or (ii) 45 days if part of an exit incentive or group termination program.
“Employer Property” – all tangible and intangible property (including data) owned by or licensed to Employer.
“Release Effective Date” – the eighth (8th) calendar day following Employee’s execution of this Agreement, provided Employee has not revoked acceptance.
“Severance Amount” – [SEVERANCE AMOUNT IN DOLLARS], payable per Section 3.2.
“Severance Benefits” – the Severance Amount plus any additional benefits specified in Section 3.2.

3. OPERATIVE PROVISIONS

3.1 Separation & Effective Date

(a) Employment Termination. Employee’s employment terminates on the Separation Date.
(b) At-Will Status Preserved. Nothing herein shall be construed as an employment contract beyond the Separation Date.
(c) Effective Date. The Agreement becomes effective on the Release Effective Date, provided it has been executed by both Parties and not revoked by Employee pursuant to Section 7.4(e).

3.2 Severance Benefits & Consideration

(a) Severance Payment. Employer shall pay Employee the Severance Amount, less applicable deductions, in [lump-sum OR [NUMBER] equal installments] commencing within [NUMBER] days following the Release Effective Date.
(b) COBRA/State Continuation Subsidy. Employer shall provide [NUMBER] months of employer-paid or reimbursed premiums for continuation coverage that Employee validly elects under COBRA or other applicable law. This subsidy does not create eligibility. Maine continuation under 24-A M.R.S. § 2809-A(11) is limited to a member or employee with at least six months of service whose coverage ends because of a qualifying temporary layoff, a qualifying permanent layoff tied to applicable federal premium assistance, or a claimed compensable work injury or disease. That Maine route requires election and initial payment within 31 days, permits a charge up to 102% of the group rate, generally lasts no longer than one year from the last day of work, and does not apply to a group policy subject to COBRA.
(c) Outplacement. Employer shall provide outplacement services through [VENDOR] for up to [DURATION] months.
(d) Additional Consideration. Only benefits in excess of final wages, accrued vacation pay, vested benefits, statutory severance, and other amounts already owed constitute consideration for the release.

3.3 Final Wages, Vacation, and Statutory Severance

(a) Final Pay. Regardless of whether Employee signs this Agreement, Employer shall pay all wages due no later than Employee’s next established payday as required by 26 M.R.S. § 626.

(b) Vacation Pay. When the terms of employment or Employer’s established practice provide paid vacation, vacation pay has the status of earned wages at cessation. Except for an employer with ten or fewer employees, a public employer, or a controlling collective-bargaining agreement, unused paid vacation accrued under Employer’s policy on and after January 1, 2023 must be paid at cessation. Employee identifies any known unpaid-wage or vacation issue here: [________________________________].

(c) Covered-Establishment Severance. If the separation is part of a closing or mass layoff at a covered establishment under 26 M.R.S. § 625-B, counsel must calculate whether Employee is an eligible employee and identify the amount and payment date here: [________________________________]. Statutory severance is one week’s pay for each year and partial year of service and is due within one regular pay period after the last full day of work. It is in addition to final wages. Do not condition a required statutory amount on signing this release. Section 625-B(3)(B) recognizes an express-contract offset only when the employee has actually been paid a greater severance benefit and the employer demonstrates the greater benefit to the Director of the Bureau of Labor Standards.

3.4 Taxes & Withholdings

Employer will make deductions and withholdings required by law and issue applicable tax forms. Any installment or delayed-payment schedule must be reviewed for compliance with or exemption from 26 U.S.C. § 409A.

4. REPRESENTATIONS & WARRANTIES

4.1 Employee represents and warrants that:
(a) Employee identifies any pending lawsuit, arbitration, charge, or complaint against an Employer 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 independent counsel of Employee’s choice.

4.2 Employer represents and warrants that:
(a) The undersigned has full authority to bind Employer; and
(b) Employer is not in material breach of any obligation to Employee as of the Execution Date that would invalidate this Agreement.

4.3 Survival. The representations and warranties in this Section survive the Release Effective Date.

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 protected conduct. The Agreement itself is not designated categorically confidential.

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 Employer Property

No later than the Separation Date, Employee shall return all Employer Property in Employee’s possession or control, including all electronic files.

Return of property does not delay final wages, vacation pay, statutory severance, or other amounts already owed.

6. DEFAULT & REMEDIES

6.1 Breach Notice. A Party alleging breach must provide written notice specifying the nature of the breach and allow a [10–30] day cure period.

6.2 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 amounts already owed, or creates a prevailing-party fee shift.

7. RISK ALLOCATION

7.1 Mutual Release of Claims

(a) Released Parties. “Employer Released Parties” means Employer, its parents, subsidiaries, affiliates, predecessors, successors, assigns, and each of their current and former officers, directors, employees, and agents. “Employee Released Parties” means Employee and Employee’s heirs, executors, administrators, and assigns.

(b) Employee Release. Subject to the exclusions in Section 7.1(d), Employee releases the Employer Released Parties from lawfully waivable Claims based on acts occurring on or before the date Employee signs this Agreement, including lawfully waivable Claims under:

• Title VII of the Civil Rights Act of 1964;
• ADEA (29 U.S.C. § 621 et seq.);
• the Maine Human Rights Act, including 5 M.R.S. §§ 4572 and 4633;
• the Americans with Disabilities Act, the FMLA, and any state or local equivalents; and
• any contract, tort, or common-law theory.

(c) Employer Release. Employer releases the Employee Released Parties from Claims arising on or before the date Employee signs this Agreement, excluding Claims related to fraud, embezzlement, or willful misconduct discovered after that date.

(d) Exclusions. Nothing herein releases: (i) Claims arising after Employee signs; (ii) Claims arising from breach of this Agreement; (iii) final wages or vacation pay due under 26 M.R.S. § 626; (iv) severance due under 26 M.R.S. § 625-B; (v) unemployment or workers’ compensation rights; (vi) vested retirement benefits; (vii) rights to indemnification under Employer’s bylaws or insurance; or (viii) rights that cannot lawfully be waived.

7.2 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, including the EEOC, NLRB, or Maine Human Rights Commission. 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.

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.

7.4 ADEA-Specific Waiver

(a) Knowing and Voluntary. Employee expressly acknowledges that this Agreement is written in a manner calculated to be understood and satisfies the “knowing and voluntary” requirements of 29 U.S.C. § 626(f).
(b) Consideration Period. Employee has [21 OR 45] days to consider this Agreement.
(c) Consultation with Counsel. Employer advises Employee to consult an attorney before signing.
(d) Revocation Period. Employee may revoke acceptance within seven (7) calendar days after signing by delivering written notice to [EMPLOYER CONTACT].
(e) Effective Date. The release of ADEA Claims becomes effective on the Release Effective Date, subject to the rights preserved in this Agreement and applicable law.
(f) Future Claims. No right or Claim arising after Employee signs is waived.
(g) Group Program. If this waiver is offered in connection with an exit incentive or other employment termination program offered to a group or class, replace 21 days with at least 45 days and, at the beginning of that period, provide a written disclosure calculated to be understood by the average eligible employee identifying the decisional unit, eligibility factors and time limits, job titles and individual ages of all eligible or selected employees, and individual ages of employees in the same job classification or organizational unit who are not eligible or selected.
(h) Final Offer. Material changes to the final offer restart the applicable 21- or 45-day 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 alter the offer before the period ends, or better terms for early signature.
(i) Waiver Challenge. Nothing requires tender back of consideration or imposes a condition precedent, penalty, attorney-fee liability, damages, or another limitation that adversely affects Employee’s right to challenge the validity of the ADEA waiver.

8. DISPUTE RESOLUTION

8.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maine and applicable federal employment law, without regard to conflict-of-law principles.

8.2 Forum. An action concerning this Agreement may be filed in a Maine 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 Section 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 is effective unless in writing and signed by both Parties. No waiver shall be deemed a continuing waiver.

9.2 Assignment. Employee may not assign any rights or delegate any obligations under this Agreement. Employer may assign to a successor by merger or asset transfer with written notice to Employee.

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

9.4 Severability; Reformation. If any provision is held invalid, the remaining provisions will continue in full force. The Parties authorize the court to modify any unenforceable provision to the minimum extent necessary to make it enforceable.

9.5 Entire Agreement. This Agreement constitutes the entire understanding between the Parties and supersedes all prior agreements concerning the subject matter.

9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original. Signatures delivered electronically or by PDF are binding.

10. EXECUTION BLOCK

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

ACKNOWLEDGMENT OF RECEIPT AND REVIEW

Employee acknowledges that Employee has:

1. Received this Agreement on [DELIVERY DATE];
2. Been advised in writing to consult an attorney;
3. Been given at least [21/45] days to consider the Agreement; and
4. Understands the right to revoke within seven (7) days after signing.

Employee’s Initials: _________ Date: _____________

Sources and References

• 29 U.S.C. § 626(f)
• 29 C.F.R. § 1625.22
• 29 C.F.R. § 1625.23
• 29 U.S.C. § 157
• McLaren Macomb, 372 NLRB No. 58
• 42 U.S.C. § 2000e-2
• 42 U.S.C. § 12112
• 29 U.S.C. § 2615
• 29 U.S.C. § 1161
• 29 U.S.C. § 1165
• 26 M.R.S. § 626
• 26 M.R.S. § 625-B
• 5 M.R.S. § 4572
• 5 M.R.S. § 4633
• 24-A M.R.S. § 2809-A
• 10 M.R.S. § 9407
• 26 U.S.C. § 409A