Severance Agreement - North Carolina

SEVERANCE AND MUTUAL RELEASE AGREEMENT

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 made and entered into as of [EFFECTIVE DATE] (the “Signing Date”) by and between [EMPLOYER LEGAL NAME], a [STATE OF INCORPORATION] [corporation/limited liability company] with its principal place of business at [ADDRESS] (“Employer”), and [EMPLOYEE NAME], residing at [ADDRESS] (“Employee”). Employer and Employee are collectively referred to as the “Parties” and individually as a “Party.”

Recitals
A. Employee’s employment with Employer will terminate effective as of [TERMINATION DATE] (the “Termination Date”).
B. Employer desires to provide, and Employee desires to accept, certain severance benefits conditioned on Employee’s execution (and non-revocation) of this Agreement.
C. The Parties intend this Agreement to effect a full and final settlement of all matters between them, including a mutual release of claims, in accordance with applicable federal and North Carolina law.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and other good and valuable consideration, the sufficiency of which is acknowledged, the Parties agree as follows:

2. DEFINITIONS

For purposes of this Agreement, the following terms have the meanings set forth below. Capitalized terms used but not defined elsewhere in this Agreement shall have the meanings given to them in this Section 2.

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

“ADEA Waiver Effective Date” has the meaning set forth in Section 3.6(c).

“Agreement” has the meaning set forth in the preamble.

“Claims” means any and all actions, causes of action, suits, debts, dues, sums of money, accounts, controversies, agreements, promises, damages, judgments, executions, demands, liabilities, obligations, costs, expenses, attorneys’ fees, and rights of any nature whatsoever, whether known or unknown, asserted or unasserted, fixed or contingent, in law or equity, based on acts occurring on or before the date Employee signs and arising out of or relating to Employee’s employment or its termination.

“Confidential Information” means all non-public information belonging to Employer, whether verbal, written, electronic or otherwise, including trade secrets and proprietary business information.

“Consideration Period” has the meaning set forth in Section 3.6.

“Effective Date” means the date this Agreement becomes irrevocably effective pursuant to Section 3.6.

“Employer Group” means Employer, its parents, subsidiaries, affiliates, predecessors, successors, assigns, and all of their current or former directors, officers, employees, agents and representatives, in their official and individual capacities.

“Employee Group” means Employee and Employee’s heirs, executors, administrators, assigns, dependents, spouse, and estate.

“Release” means the mutual release of Claims set forth in Section 7.1.

“Severance Benefits” has the meaning set forth in Section 3.2.

3. OPERATIVE PROVISIONS

3.1 Separation of Employment

(a) Employment Termination. Employee’s employment with Employer shall terminate on the Termination Date.
(b) Final Compensation. Employer will pay all wages due on or before the next regular payday. Bonuses, commissions, or other calculation-based wages will be paid on the first regular payday after the amount becomes calculable. Such wages may be forfeited only under a policy or practice of which Employee received the notice required by North Carolina law. N.C. Gen. Stat. § 95-25.7. Vacation, PTO, expenses, and plan benefits will be handled under the governing written terms and applicable law. Final Compensation will be paid on [PAY DATE] through [PAYMENT METHOD] regardless of whether Employee signs this Agreement.

3.2 Severance Consideration

Subject to Employee’s timely execution and non-revocation of this Agreement, Employer shall provide the following additional consideration (collectively, the “Severance Benefits”):

1. Severance Pay: A lump-sum payment of $[SEVERANCE AMOUNT], less all required withholdings, payable on the first administratively-feasible payroll date after the Effective Date.
2. COBRA Subsidy: Employer shall reimburse Employee for the employer-share of COBRA premiums for [NUMBER] months following the Termination Date, subject to timely COBRA election.
3. Outplacement: Employer shall provide up to [DOLLAR AMOUNT] of outplacement services through a provider of Employer’s choosing, to be used within [TIME FRAME].

Only benefits in excess of wages, vested benefits, policy or plan benefits already due, and other amounts already owed constitute consideration for the release.

3.3 Taxes and Withholding

All payments under this Agreement will be subject to applicable tax withholding. Employer makes no representation concerning the tax consequences of any payment hereunder and Employee acknowledges sole responsibility for any taxes that may be due.

3.4 Return of Property

No later than the Termination Date (or promptly upon discovery thereafter), Employee shall return to Employer all Employer property, including keys, credit cards, computers, mobile devices, documents, and Confidential Information. Return of property does not delay Final Compensation or other amounts already owed.

3.5 Ongoing Cooperation

Employee shall reasonably cooperate with Employer in any transition matters and in the defense or prosecution of any claims relating to periods of Employee’s employment. Employer shall reimburse reasonable out-of-pocket expenses incurred in providing such cooperation.

3.6 ADEA/OWBPA Compliance

(a) Applicability and Consideration Period. If Employee is age 40 or older, Employee has at least twenty-one (21) calendar days to consider this Agreement, or at least forty-five (45) days if the waiver is offered in connection with an exit incentive or other employment termination program offered to a group or class (the “Consideration Period”). 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.
(b) Revocation. Employee may revoke signature within seven (7) calendar days after signing by delivering written notice to [EMPLOYER CONTACT].
(c) Effective Date. This Agreement shall become effective on the eighth (8th) calendar day after Employee signs, provided Employee has not revoked (the “ADEA Waiver Effective Date”).
(d) Acknowledgments. By signing, Employee acknowledges:
i. This Agreement is written in a manner calculated to be understood.
ii. This Agreement specifically refers to rights under the ADEA.
iii. Employee is advised in writing to consult with an attorney.
iv. Employee receives consideration in addition to anything of value already owed.

(e) Group Program Disclosure. If the 45-day period applies, Employer must provide, at the beginning of that period, a written disclosure calculated to be understood by the average eligible employee that identifies 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.

(f) Final Offer; Future Claims; Waiver Challenge. Material changes to the final offer restart the applicable 21- or 45-day period unless the Parties agree otherwise. No right or claim arising after Employee signs is waived. 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.

3.7 Conditions Precedent

Employer shall have no obligation to provide Severance Benefits until Employee delivers a signed copy of this Agreement and the revocation period expires without revocation. Employee need not wait until the Consideration Period ends to sign.

4. REPRESENTATIONS & WARRANTIES

4.1 Mutual Authority. Each Party represents that it has full authority to execute and deliver this Agreement and to carry out its terms.

4.2 Employee Representation. Employee has disclosed any known unpaid-compensation or benefit issue here: [________________________________]. This representation does not waive protected agency rights or delay payment of amounts already owed.

5. COVENANTS & RESTRICTIONS

5.1 Confidentiality of Employer 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.

5.2 Agreement Terms. The Agreement itself is not designated categorically confidential.

5.3 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.

5.4 Protected Activity. Nothing in this Agreement limits Employee from filing a charge or complaint with, communicating or cooperating with, or participating in an investigation or proceeding before the EEOC, NLRB, SEC, or another governmental agency. Nothing interferes with agency enforcement authority or waives a right that cannot lawfully be waived. Any effect of the release on individual monetary recovery is governed by applicable law.

5.5 Post-Termination Restrictive Covenants. [INCLUDE any non-competition or non-solicitation provisions or reference to existing agreements, e.g., “Employee acknowledges and reaffirms the Continuing Obligations under the Non-Competition Agreement dated [DATE].”]

6. DEFAULT & REMEDIES

6.1 Lawful 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.

6.2 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. RISK ALLOCATION

7.1 Mutual Release of Claims

(a) Employee Release. For valuable consideration, Employee, on behalf of Employee Group, irrevocably releases and forever discharges Employer Group from all lawfully waivable Claims based on acts occurring on or before Employee signs, including those arising under Title VII of the Civil Rights Act, the Americans with Disabilities Act, the ADEA (consistent with 29 U.S.C. § 626(f)), the Family and Medical Leave Act, North Carolina's employment-discrimination public policy in N.C. Gen. Stat. § 143-422.2, the Retaliatory Employment Discrimination Act including N.C. Gen. Stat. § 95-241, and other federal, state, local, contract, tort, or common law. The release excludes rights created by this Agreement; wages, vested benefits, policy or plan benefits already due, and other amounts already owed; unemployment or workers’ compensation benefits; claims arising after Employee signs; protected agency activity under Section 5.4; and claims that cannot lawfully be waived.
(b) Employer Release. Employer releases Employee from all Claims Employer may have relating to Employee’s employment through the date Employee signs, except rights created by this Agreement, claims arising from Employee’s willful misconduct or fraud discovered after the Effective Date, and claims that cannot lawfully be waived.

7.2 Protected Rights

Nothing in this Agreement prohibits protected agency activity, interferes with agency enforcement authority, delays amounts already owed, or imposes employee indemnity, a liability cap, a force-majeure excuse for payment, or another release-challenge penalty.

8. DISPUTE RESOLUTION

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

8.2 Forum
An action concerning this Agreement may be filed in a North Carolina 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 Remedies
The remedies provision in Section 6 applies.

9. GENERAL PROVISIONS

9.1 Entire Agreement. This Agreement constitutes the complete and exclusive statement of the agreement between the Parties with respect to its subject matter and supersedes all prior negotiations and agreements.

9.2 Amendment and Waiver. No amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by both Parties. A waiver on one occasion shall not constitute a waiver on any future occasion.

9.3 Assignment. Employee may not assign or delegate any rights or obligations under this Agreement. Employer may assign this Agreement to any successor by merger, consolidation, or asset transfer.

9.4 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

9.5 Severability. If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be reformed to the minimum extent necessary to render it enforceable, and the remaining provisions shall remain in full force and effect.

9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts. The Parties may use an agreed electronic-signature method subject to applicable law and counsel review.

9.7 Headings. Headings are for reference only and shall not affect interpretation.

10. EXECUTION BLOCK

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

[OPTIONAL NOTARY ACKNOWLEDGMENT — attach a current North Carolina acknowledgment form after counsel review if notarization is desired.]

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
• N.C. Gen. Stat. § 95-25.7
• N.C. Gen. Stat. § 143-422.2
• N.C. Gen. Stat. § 95-241