Severance Agreement - Michigan

SEVERANCE AND MUTUAL RELEASE AGREEMENT

(Michigan – 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

This Severance and Mutual Release Agreement (this “Agreement”) is entered into by and between [COMPANY LEGAL NAME], a [STATE OF INCORPORATION] [corporation/LLC], with its principal place of business at [ADDRESS] (“Company”), and [EMPLOYEE NAME], residing at [ADDRESS] (“Employee”).

Effective Date: The date this Agreement becomes effective pursuant to Section 3.4(c).

Recitals
A. Employee’s employment with Company is terminating effective [TERMINATION DATE] (the “Separation Date”).
B. Company desires to provide Employee with severance benefits in exchange for Employee’s promises herein, including a comprehensive release of claims.
C. Employee desires to accept such benefits and enter into this Agreement on the terms set forth below.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

2. DEFINITIONS

The following terms have the meanings assigned below (alphabetical order):

“ADEA” – the federal Age Discrimination in Employment Act of 1967, as amended.

“Agreement” – this Severance and Mutual Release Agreement, including all Exhibits and Schedules.

“Confidential Information” – any non-public information concerning Company’s business, customers, finances, trade secrets, or personnel that Employee acquired during employment.

“Effective Date” – defined in the Document Header.

“Employment Claims” – any and all claims arising out of or related to Employee’s employment or termination, including but not limited to those under Title VII, ADEA, ADA, FMLA, MCL 37.2202, MCL 37.1202, MCL 408.471–408.475, and common law.

“Severance Benefits” – the consideration described in Section 3.2 below.

“Releasees” – Company, its parents, subsidiaries, affiliates, predecessors, successors, assigns, and each of their respective officers, directors, employees, and agents.

3. OPERATIVE PROVISIONS

3.1 Termination of Employment. Employment terminates on the Separation Date. Except as specifically provided herein, Employee’s participation in all Company benefit plans ends pursuant to plan terms.

3.2 Severance Benefits. Conditioned on timely execution and non-revocation of this Agreement, Company shall provide Employee:
(a) Cash Severance. A lump-sum payment of $[AMOUNT] (the “Severance Payment”), less applicable withholdings, payable on the first regular payroll date after the Effective Date.
(b) COBRA Premium Assistance. Reimbursement of Employee’s COBRA premiums for [NUMBER] months following the Separation Date, subject to timely election and proof of payment.
(c) [OPTIONAL: Outplacement Services] valued at $[AMOUNT] for a period of [NUMBER] months.

3.3 Final Wages, Fringe Benefits, and Additional Consideration.
(a) Final Wages. Regardless of whether Employee signs this Agreement, Company shall pay all wages earned and due under MCL 408.475. For a discharged employee, Company must pay immediately, as soon as the amount can with due diligence be determined. For an employee voluntarily leaving employment, Company must pay as soon as the amount can with due diligence be determined. The special contract-completion rule in § 408.475(3) must be separately reviewed if applicable.
(b) Fringe Benefits. Under MCL 408.471(e), fringe benefits include compensation due under a written contract or written policy for vacation, sick or personal time, bonuses, authorized expenses, and employer contributions. Company shall pay fringe benefits according to the governing written contract or written policy as required by MCL 408.473. Employee identifies any known unpaid-wage or fringe-benefit issue here: [________________________________].
(c) Additional Consideration. Only benefits in excess of wages, fringe benefits, vested benefits, and other amounts already owed constitute consideration for the release.

3.4 ADEA/OWBPA Compliance.
(a) Consideration Period. Employee has at least 21 days to consider the final Agreement. If Section 3.4(f) applies, Employee instead has at least 45 days.
(b) Advice to Consult Counsel. Employee is advised, in writing, to consult an attorney before signing.
(c) Revocation Period. Employee may revoke this Agreement within 7 days after signing by delivering written notice to Company’s [TITLE] at [ADDRESS]. This Agreement becomes effective on the eighth day (the “Effective Date”) if not revoked.
(d) Knowing and Voluntary. Employee represents that execution is knowing and voluntary within the meaning of 29 U.S.C. § 626(f).
(e) Future Claims. No right or claim arising after Employee signs is waived.
(f) 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.
(g) 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.
(h) 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.

3.5 Taxes. Company 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.

3.6 Conditions Precedent. Company’s severance obligations are conditioned on timely execution and non-revocation. Wages, fringe benefits, vested benefits, and other amounts already owed are not conditioned on signing, returning property, or compliance with another covenant.

4. REPRESENTATIONS & WARRANTIES

4.1 By Employee. Employee represents and warrants that:
(a) Pending Matters. Employee identifies any pending lawsuit, arbitration, charge, or complaint against a Releasee here: [________________________________]. This disclosure does not restrict protected agency communication or participation.
(b) No Reliance. Employee enters into this Agreement without reliance on any representation not set forth herein.
(c) Authority. Employee has full capacity and authority to execute and perform this Agreement.

4.2 By Company. Company represents and warrants that it is duly authorized to enter into this Agreement and to perform its obligations.

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

5. COVENANTS & RESTRICTIONS

5.1 Mutual Non-Disparagement. During [TIME PERIOD], neither party shall knowingly make a false statement of fact intended to harm the other’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.

5.2 Confidential Information. 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.

5.3 Return of Company Property. No later than the Separation Date, Employee shall return all Company Property, including electronic records.

Return of property does not delay wages, fringe benefits, vested benefits, or other amounts already owed.

5.4 Restrictive Covenants. No prior restrictive covenant is automatically reaffirmed or incorporated by this Agreement. No new noncompetition or nonsolicitation covenant is included. Use a separately reviewed Michigan addendum for any proposed restraint.

5.5 Cooperation. Employee shall reasonably cooperate with Company in any investigation or litigation relating to matters occurring during employment.

6. DEFAULT & REMEDIES

6.1 Events of Default. A party’s material breach of this Agreement constitutes a default.

6.2 Notice and Cure. Non-breaching party must give written notice specifying the breach; breaching party has 10 days 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 amounts already owed, or creates a prevailing-party fee shift.

7. RISK ALLOCATION

7.1 Mutual Release of Claims.
(a) Released Claims by Employee. For additional consideration, Employee, on behalf of self and heirs, releases Releasees from lawfully waivable Employment Claims, whether known or unknown, based on acts occurring on or before the date Employee signs this Agreement, excluding:
(i) claims arising after Employee signs this Agreement;
(ii) rights to enforce this Agreement;
(iii) claims for vested retirement benefits or workers’ compensation;
(iv) rights of indemnification under applicable law;
(v) wages and fringe benefits due under MCL 408.471, 408.473, and 408.475;
(vi) agency communication, participation, and enforcement rights; and
(vii) rights that cannot lawfully be waived.
(b) Released Claims by Company. Company releases Employee from claims arising out of employment known to Company as of the date Employee signs this Agreement, excluding willful misconduct, fraud, or criminal acts.

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 Michigan Department of Civil Rights. 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 No Admission. This Agreement is not an admission of liability or wrongdoing by either party.

8. DISPUTE RESOLUTION

8.1 Governing Law. This Agreement shall be governed by the laws of the State of Michigan and, where applicable, federal law.

8.2 Forum. An action concerning this Agreement may be filed in a Michigan 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 Amendments; Waivers. No amendment or waiver is effective unless in a writing signed by both parties. A waiver on one occasion is not a waiver on any other occasion.

9.2 Assignment. Neither party may assign this Agreement without the prior written consent of the other, except Company may assign to a successor in interest.

9.3 Successors and Assigns. This Agreement binds and inures to the benefit of the parties’ permitted successors and assigns.

9.4 Severability; Reformation. If any provision is unenforceable, it shall be limited to the minimum extent necessary, and the remaining provisions shall remain in full force.

9.5 Entire Agreement; Integration. 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 deemed an original, and signatures transmitted by PDF or electronic signature service (e.g., DocuSign) shall be deemed originals.

9.7 Notices. All notices must be in writing and delivered (i) personally, (ii) by certified mail (return receipt requested), or (iii) by nationally recognized overnight courier, to the addresses in the Document Header or as later designated. Notice is effective upon receipt.

10. EXECUTION BLOCK

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

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
• MCL 408.471
• MCL 408.473
• MCL 408.475
• MCL 37.2202
• MCL 37.1202
• MCL 450.837
• 26 U.S.C. § 409A