Severance Agreement - New Jersey

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

SEVERANCE AND MUTUAL RELEASE AGREEMENT (this “Agreement”) is entered into as of [Effective Date] (the “Effective Date”) by and between [Full Legal Name of Employer], a [State of Incorporation] [corporation/LLC/etc.] (“Company”), and [Full Legal Name of Employee] (“Employee,” and together with Company, each a “Party” and collectively the “Parties”).

Recitals

A. Employee’s employment with Company will terminate effective [Separation Date] (the “Separation Date”).
B. Company desires to provide Employee with severance benefits in exchange for certain covenants, representations, and a mutual release of claims, all as set forth herein.
C. The Parties intend that this Agreement comply with the Older Workers Benefit Protection Act, 29 U.S.C. § 626(f), and all applicable federal and New Jersey law.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

2. DEFINITIONS

For purposes of this Agreement, capitalized terms have the meanings set forth below. Defined terms appear alphabetically for ease of reference.

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

“Confidential Information” has the meaning assigned in Section 5.1.

“Covered Claims” has the meaning assigned in Section 7.2(a).

“Government Agency” means any federal, state, or local governmental, regulatory, or law-enforcement entity or agency.

“Payment Commencement Date” means the first regularly scheduled payroll date occurring after both (i) the Effective Date and (ii) the expiration of the Revocation Period described in Section 3.4.

"Severance Amount" means $[Dollar Amount] in discretionary benefits offered for this Agreement, less applicable withholdings and authorized deductions. It excludes any compensation or statutory severance already owed without this Agreement.

“Severance Period” means the period commencing on the Payment Commencement Date and ending [Number] weeks thereafter.

3. OPERATIVE PROVISIONS

3.0 Final Compensation. Company will pay all wages due no later than the regular payday for the pay period in which separation occurs. For incentive compensation, Company will pay a reasonable approximation until the exact amount can be computed. N.J.S.A. 34:11-4.3. Final Compensation is due regardless of whether Employee signs this Agreement.

NJ WARN gate. Determine whether the separation is covered by N.J.S.A. 34:21-2 before using this Agreement: [COVERED / NOT COVERED / COUNSEL REVIEW PENDING]. If covered, record the statutory severance calculation and payment separately: [AMOUNT / PAYMENT DATE]. Section 34:21-2(b) requires severance of at least one week's pay for each full year of employment for each covered employee, plus four weeks if required notice was short, subject to the statute's rate, greater-severance, and federal WARN back-pay credit rules. That statutory amount is earned on termination and is owed without signing this Agreement. Under § 34:21-2(e), a waiver of the statutory severance right is ineffective without approval by the Commissioner of Labor and Workforce Development or a court of competent jurisdiction. Do not present statutory severance as consideration for this release or delay it pending signature or revocation. Obtain counsel review of coverage, calculation, timing, and any proposed waiver.

3.1 Discretionary Severance Benefits. Conditioned upon Employee’s timely execution and non-revocation of this Agreement, Company shall provide the following benefits in addition to amounts already owed without this Agreement:

a. Cash Severance. Company shall pay Employee the Severance Amount in substantially equal installments over the Severance Period, in accordance with Company’s normal payroll practices.
b. COBRA Contribution. For [X] months following the Separation Date, Company shall pay [percentage or dollar amount] of the premium cost for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), provided Employee timely elects such coverage.
c. Outplacement Assistance. Company shall reimburse Employee up to $[Amount] for documented outplacement services incurred within [X] months following the Separation Date.

3.2 Consideration. Employee acknowledges that the discretionary benefits in Section 3.1 exceed amounts already owed to Employee and constitute independent consideration for Employee’s obligations hereunder. Only those discretionary benefits are conditioned on this Agreement becoming effective and irrevocable. Final Compensation and any NJ WARN severance due under § 34:21-2 remain payable without a release.

3.3 ADEA/OWBPA Compliance.
a. Advice to Consult Counsel. Employee is hereby advised, in writing, to consult with an attorney of Employee’s choosing prior to executing this Agreement.
b. Consideration Period. Employee has twenty-one (21) days (or forty-five (45) days if part of a group termination program) to review and consider this Agreement (the “Consideration Period”). Employee may voluntarily execute this Agreement before the end of the Consideration Period, but not before the Separation Date.
c. Plain Language; No Waiver of Future Claims. This Agreement is written in a manner calculated to be understood by Employee and does not purport to waive claims arising after the Execution Date.
d. Revocation. Employee may revoke this Agreement within seven (7) calendar days after executing it (the “Revocation Period”) by delivering written notice of revocation to [Designated Company Representative, Title, Address]. This Agreement shall not become effective until the Revocation Period expires without revocation (the “Effective Date” for ADEA purposes).
e. Group Program Disclosure. If the 45-day period applies, Company must provide at the beginning of that period a written disclosure identifying the decisional unit, eligibility factors and time limits, job titles and individual ages of eligible or selected employees, and individual ages of employees in the same job classification or organizational unit who were not eligible or selected.
f. 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.

3.4 Tax Withholding. Company shall withhold from any payments hereunder all federal, state, and local taxes required by law. Employee acknowledges that Company has made no representations regarding tax consequences and agrees to be solely responsible for any such obligations.

4. REPRESENTATIONS & WARRANTIES

4.1 Mutual Authority. Each Party represents that it has full authority to enter into and perform this Agreement and that doing so does not violate any other agreement or legal obligation.

4.2 Employee Representations. Employee further represents and warrants that:
a. Employee has identified any known unpaid-compensation or benefit issue here: [________________________________];
b. This disclosure does not waive protected agency rights or delay payment of amounts already owed; and
c. Employee has not transferred or assigned any claim released herein.

4.3 Survival. The representations and warranties in this Section 4 shall survive the execution of this Agreement.

5. COVENANTS & RESTRICTIONS

5.1 Confidentiality of Company Information. Employee shall protect legitimate trade secrets and non-public proprietary information. The Agreement itself and facts relating to a claim of discrimination, retaliation, or harassment are not designated categorically confidential. N.J.S.A. 10:5-12.8.

NOTICE ABOUT CONFIDENTIALITY: If Employee publicly reveals enough details of a discrimination, retaliation, or harassment claim to make Company reasonably identifiable, any provision keeping the settlement or its underlying facts confidential cannot be enforced against Company.

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 conceal or restrict discussion of facts relating to discrimination, retaliation, or harassment and does not restrict truthful statements, government communications, whistleblower reports, testimony, discussions of wages or working conditions protected by law, or other protected conduct. See Savage v. Township of Neptune, 257 N.J. 204 (2024).
5.3 Return of Property. On or before the Separation Date, Employee shall return all Company property, including documents and electronically stored information, and certify such return in writing upon request.
5.4 Permitted Disclosures. Nothing in this Agreement restricts Employee from communicating with any Government Agency, making protected whistleblower disclosures, discussing wages or working conditions protected by law, or discussing facts relating to claims of discrimination, retaliation, or harassment under N.J.S.A. 10:5-12.8.

6. DEFAULT & REMEDIES

6.1 Events of Default.
a. Employee Default: Any material breach of Sections 5.1–5.3.
b. Company Default: Failure to timely pay any amount due under Section 3.1 that remains uncured for five (5) business days after written notice.

6.2 Notice and Cure. The non-breaching Party shall provide written notice specifying the nature of the breach. The breaching Party shall have ten (10) business days to cure, except for breaches of confidentiality, which are not subject to cure.

6.3 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, delays amounts already owed, or creates a general prevailing-party fee shift. N.J.S.A. 10:5-12.9 independently governs attempted enforcement of provisions made unenforceable by N.J.S.A. 10:5-12.7 et seq.

7. RISK ALLOCATION

7.1 No Admission of Liability. This Agreement is a compromise and shall not be construed as an admission by either Party of wrongdoing or liability.

7.2 Mutual Release of Claims.
a. Scope of Release. Subject to the carve-outs in Section 7.3, each Party, on behalf of itself and its heirs, successors, and assigns, irrevocably releases and discharges the other Party, its affiliates, and all related parties from any and all claims, whether known or unknown, suspected or unsuspected, based on acts occurring on or before the date Employee signs this Agreement (the “Covered Claims”). The release by Employee includes, without limitation, claims under: Title VII of the Civil Rights Act, the ADEA, the Americans with Disabilities Act, the Family and Medical Leave Act, the New Jersey Law Against Discrimination, the New Jersey Wage and Hour Law, the New Jersey Wage Payment Law, and any other federal, state, or local law, regulation, or common-law theory.
b. Mutuality. Company likewise releases Employee from all Covered Claims, excluding claims arising from fraudulent, willful, or criminal conduct.

7.3 Carve-Outs. Nothing in this Agreement waives:
i. Claims that arise after the Effective Date;
ii. Rights to vested benefits under qualified retirement or welfare plans;
iii. Rights to unemployment or workers’ compensation benefits;
iv. Claims or rights that cannot be waived by law; and
v. Any right to severance under N.J.S.A. 34:21-2, unless a waiver receives the approval required by § 34:21-2(e); and
vi. Employee’s right to file, cooperate, or participate in an EEOC, DOL, NLRB, or other Government Agency proceeding; any effect of the release on individual monetary recovery is governed by applicable law.

7.4 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 all disputes hereunder shall be governed by the substantive laws of the State of New Jersey and applicable federal law, without regard to conflict-of-law principles.

8.2 Forum. An action concerning this Agreement may be filed in a New Jersey 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.

9. GENERAL PROVISIONS

9.1 Amendment; Waiver. No modification of this Agreement is effective unless in writing and signed by both Parties. A waiver of any breach shall not be deemed a waiver of any subsequent breach.

9.2 Assignment. This Agreement is personal to Employee and may not be assigned by Employee. Company may assign this Agreement to any successor in interest.

9.3 Severability. If any provision is held invalid, the remaining provisions shall remain in full force, and the Parties agree to substitute a valid provision that most closely approximates the original intent.

9.4 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter and supersedes all prior understandings, oral or written, except any existing confidentiality, invention assignment, or restrictive-covenant agreements, which shall continue in full force unless expressly superseded herein.

9.5 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and all of which together constitute one instrument. Signatures delivered electronically (e.g., via PDF or certified e-signature platform) shall be deemed original.

10. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties have executed this Severance and Mutual 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 C.F.R. § 1625.23
• 29 U.S.C. § 157
• 29 U.S.C. § 1053
• 29 U.S.C. § 1161
• 29 U.S.C. § 2615
• 42 U.S.C. § 2000e-2
• 42 U.S.C. § 12112
• New Jersey Wage Payment Law, including N.J.S.A. 34:11-4.3
• P.L. 2019, c.423, N.J.S.A. 34:21-2(b), (e), and the NJDOL current WARN statute link
• P.L. 2019, c.39, N.J.S.A. 10:5-12.7 to -12.11
• Savage v. Township of Neptune, 257 N.J. 204 (2024)