SEVERANCE AND MUTUAL RELEASE AGREEMENT
(Pennsylvania)
[// GUIDANCE: This template is designed for use with Pennsylvania-based separations. It incorporates federal Age Discrimination in Employment Act (“ADEA”)/Older Workers Benefit Protection Act (“OWBPA”) waiver requirements (29 U.S.C. § 626(f)), and common-law, statutory, and public-policy considerations under Pennsylvania and federal employment law. All bracketed items must be completed or deleted before execution.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
SEVERANCE AND MUTUAL RELEASE AGREEMENT (this “Agreement”) is made and entered into as of [Effective Date] (the “Effective Date”), by and between [Employer Legal Name], a [State of Incorporation] [entity type] with its principal place of business at [Address] (“Employer”), and [Employee Full Legal Name] (“Employee”). Employer and Employee are sometimes referred to individually as a “Party” and collectively as the “Parties.”
RECITALS
A. Employee’s employment with Employer terminated effective [Separation Date] (“Separation Date”).
B. Employer desires to provide Employee certain severance benefits in exchange for Employee’s promises, covenants, and releases herein, and Employee desires to accept those benefits under the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and intending to be legally bound, 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 in a later section shall have the meanings assigned in this Section 2.
“Affiliate” – any entity controlling, controlled by, or under common control with Employer, directly or indirectly.
“Claims” – any and all charges, claims, complaints, causes of action, liabilities, obligations, promises, agreements, controversies, damages, rights, demands, costs, losses, debts, and expenses (including attorney fees) of any nature whatsoever, in law or equity, whether known or unknown, suspected or unsuspected, disclosed or undisclosed.
“Confidential Information” – all non-public information concerning Employer or its Affiliates, including trade secrets, financial data, personnel information, customer lists, pricing, and proprietary processes.
“Consideration Period” – the period of [21] days (or [45] days in the case of an employment termination program affecting multiple employees) during which Employee may review and consider this Agreement before signing, as required by 29 U.S.C. § 626(f)(1)(F).
“Revocation Period” – the seven (7) calendar days following Employee’s execution of this Agreement, during which Employee may revoke this Agreement pursuant to 29 U.S.C. § 626(f)(1)(G).
“Severance Amount” – the gross sum of $[Amount], less applicable withholdings, payable to Employee under Section 3.1.
3. OPERATIVE PROVISIONS
3.1 Severance Payment. Subject to (a) Employee’s execution and non-revocation of this Agreement and (b) Employee’s continued compliance with all covenants herein, Employer shall pay Employee the Severance Amount in a lump sum on the first regular payroll date occurring after the Revocation Period expires.
3.2 COBRA Subsidy. Employer shall subsidize the employee-portion premium cost of continued group health coverage under COBRA for [Number] months following the Separation Date, or until Employee becomes eligible for other group coverage, whichever occurs first. Employee is responsible for timely electing COBRA coverage.
3.3 Outplacement Assistance. Employer will provide outplacement services through [Provider] for a period of [Number] months following the Separation Date.
3.4 Return of Property & Transition Cooperation.
(a) No later than [Five (5)] business days after the Effective Date, Employee shall return all Employer Property (including electronic files) and shall certify in writing that no copies were retained.
(b) Upon reasonable request during the [60] days following the Separation Date, Employee shall cooperate in transferring knowledge and answering inquiries relating to pending matters, without additional compensation other than reasonable out-of-pocket expenses.
3.5 Conditions Precedent. Employer’s obligations under this Agreement are expressly conditioned upon (i) Employee’s execution within the Consideration Period, (ii) non-revocation within the Revocation Period, and (iii) Employee’s ongoing compliance with Sections 5 and 7.2.
4. REPRESENTATIONS & WARRANTIES
4.1 Mutual Authority. Each Party represents that it has full authority to enter into this Agreement and that doing so does not violate any other agreement.
4.2 Employee Specific. Employee further represents and warrants that:
(a) Employee has had the opportunity to consult with an attorney of Employee’s choice before signing.
(b) Employee has read this Agreement in its entirety and understands its legal effect.
(c) Employee has not assigned or transferred any Claim released herein.
(d) Employee is not aware of any unreported workplace injuries or occupational illnesses.
4.3 Survival. The representations and warranties in this Section 4 survive the execution and performance of this Agreement.
5. COVENANTS & RESTRICTIONS
5.1 Confidentiality. Employee shall keep the terms of this Agreement and all Confidential Information strictly confidential, except: (i) to Employee’s spouse, attorney, or tax advisor (each of whom shall be informed of and bound by this confidentiality obligation); (ii) in response to lawful subpoena or court order; or (iii) to governmental agencies for legally protected communications.
5.2 Non-Disparagement. Employee agrees not to make any statement (oral, written, or electronic) that disparages Employer or its Affiliates, including past or present officers, directors, employees, or products. Employer shall instruct its C-suite executives not to disparage Employee. Nothing herein prohibits truthful statements compelled by law or protected concerted activity.
5.3 Restrictive Covenants. If Employee is already bound by valid restrictive covenants (e.g., non-competition, non-solicitation), such covenants remain in full force and effect. To the extent no such covenants exist, Employer may elect to include the following:
(a) Non-Solicitation of Customers for [12] months post-Separation;
(b) Non-Solicitation of Employees for [12] months post-Separation.
5.4 Injunctive Relief (Limited). Employee acknowledges that breach of Sections 5.1–5.3 would cause irreparable harm for which monetary damages are inadequate. Subject to Section 8.4, Employer may seek temporary or permanent injunctive relief, provided that any bond shall not exceed $[25,000] or the Severance Amount, whichever is less.
6. DEFAULT & REMEDIES
6.1 Events of Default. The following constitute “Events of Default”:
(a) Material breach by Employee of any covenant in Section 5;
(b) Employer’s failure to pay the Severance Amount within [10] business days after written notice from Employee.
6.2 Cure.
(a) Employee Default. Employer shall provide written notice; Employee shall have [10] days to cure, if curable.
(b) Employer Default. Employer shall have [10] days after notice to cure payment default.
6.3 Remedies.
(a) For Employee Default. Employer may (i) cease all remaining severance benefits, (ii) demand repayment of previously paid Severance Amount, and (iii) pursue any remedy at law or equity subject to Section 7.2.
(b) For Employer Default. Employee may pursue contract damages or specific performance, but total recovery (including attorney fees) shall not exceed the Severance Amount.
6.4 Attorney Fees. The prevailing Party in any action to enforce this Agreement shall be entitled to reasonable attorney fees and costs, except where prohibited by law.
7. RISK ALLOCATION
7.1 Mutual Release of Claims.
(a) Employee Release. In exchange for the consideration provided, Employee irrevocably and unconditionally releases Employer, its Affiliates, and their current and former officers, directors, employees, shareholders, agents, and benefit plans (“Released Parties”) from any and all Claims, including but not limited to those arising under:
• Title VII of the Civil Rights Act of 1964;
• the Age Discrimination in Employment Act of 1967, as amended (“ADEA”);
• the Americans with Disabilities Act;
• the Family and Medical Leave Act;
• the Pennsylvania Human Relations Act;
• any other federal, state, or local statute, regulation, or common law relating to employment or termination.
Employee does NOT release: (i) claims arising after the Effective Date; (ii) rights to enforce this Agreement; (iii) vested pension or 401(k) benefits; (iv) workers’ compensation claims; (v) unemployment compensation; or (vi) the right to file a charge with the EEOC or other agency (though Employee waives any personal recovery).
(b) Employer Release. Employer, on behalf of itself and its Affiliates, releases Employee from all Claims arising out of or relating to Employee’s employment or separation, excluding: (i) claims based on Employee’s fraud or willful misconduct discovered after the Effective Date; (ii) claims to enforce this Agreement; or (iii) claims that cannot be waived by law.
7.2 Limitation of Liability. Notwithstanding anything herein, each Party’s total aggregate liability for matters arising out of or related to this Agreement shall not exceed the Severance Amount, except with respect to (i) breaches of Section 5 (Confidentiality, Non-Disparagement, Restrictive Covenants); (ii) claims for indemnification by third parties; or (iii) fraud or intentional misconduct.
7.3 Indemnification. Each Party (“Indemnifying Party”) shall indemnify, defend, and hold harmless the other Party and its Released Parties from any third-party Claim arising out of a material breach of this Agreement by the Indemnifying Party. Indemnification obligations survive termination of this Agreement.
7.4 Force Majeure. Neither Party shall be liable for failure to perform its obligations (excluding payment) when such failure is caused by events beyond its reasonable control, including acts of God, war, terrorism, and governmental orders, provided that the affected Party promptly notifies the other and resumes performance as soon as practicable.
8. DISPUTE RESOLUTION
8.1 Governing Law. This Agreement and any disputes hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania and applicable federal law, without giving effect to conflict-of-laws rules.
8.2 Forum Selection. Subject to Section 8.3, the Parties consent to the exclusive jurisdiction of the state and federal courts located in [County], Pennsylvania for any action arising out of or relating to this Agreement.
8.3 Arbitration (Optional). If [checked ☐] the Parties agree to binding arbitration, all disputes (except for requests for injunctive relief under Section 5.4) shall be finally resolved by confidential arbitration administered by [AAA/JAMS] under its employment rules in [City], Pennsylvania. The arbitrator may award any relief available at law, but may not award punitive damages absent statutory authorization. Judgment on the award may be entered in any court of competent jurisdiction.
8.4 Jury Waiver (Optional). IF ARBITRATION IS NOT SELECTED, AND ONLY TO THE EXTENT ENFORCEABLE, THE PARTIES KNOWINGLY AND VOLUNTARILY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS AGREEMENT.
8.5 Injunctive Relief Preservation. Nothing in this Section 8 limits a Party’s right to seek provisional or injunctive relief in court (subject to Section 5.4) to maintain the status quo pending resolution of the underlying dispute.
9. GENERAL PROVISIONS
9.1 Amendment; Waiver. No amendment to this Agreement is effective unless in a written instrument signed by both Parties. No waiver of any provision is effective unless in writing and signed by the Party granting the waiver.
9.2 Assignment. Employee may not assign or delegate any rights or obligations hereunder. Employer may assign this Agreement to any successor by merger, reorganization, or sale of substantially all assets, provided that such successor assumes Employer’s obligations.
9.3 Successors & Assigns. This Agreement is binding upon and inures to the benefit of the Parties and their respective successors, permitted assigns, heirs, and legal representatives.
9.4 Severability; Reformation. If any provision is held unlawful or unenforceable, such provision shall be severed, and the remainder of the Agreement shall remain in full force. The Parties authorize the court (or arbitrator) to modify any unenforceable provision to the minimum extent necessary to render it lawful and enforceable.
9.5 Integration. This Agreement constitutes the entire understanding between the Parties with respect to the subject matter hereof and supersedes all prior agreements, whether written or oral, except for any restrictive covenants that expressly survive termination of employment.
9.6 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 by PDF, facsimile, or electronic signature service (e.g., DocuSign) are deemed effective and binding.
9.7 Headings. Headings are for convenience only and do not affect interpretation.
9.8 Taxes. Employer shall withhold all required federal, state, and local taxes from payments made under this Agreement. Employee is responsible for any additional tax liability, interest, or penalties.
9.9 No Admission. Nothing in this Agreement is or shall be construed as an admission of wrongdoing or liability by either Party.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set forth below.
| EMPLOYER | EMPLOYEE |
|---|---|
| [Employer Legal Name] | [Employee Name] |
| By: _________ | _______ |
| Name: _______ | |
| Title: _______ | |
| Date: ________ | Date: _______ |
[Optional Notary Acknowledgment—Pennsylvania]
Employee Acknowledgment (Required by 29 U.S.C. § 626(f))
I, [Employee Name], acknowledge that:
1. I have been given [21/45] days to consider this Agreement.
2. I have seven (7) days after signing to revoke my acceptance by delivering written notice to [Employer Contact].
3. I have been advised in writing to consult with an attorney before signing.
4. I sign this Agreement knowingly, voluntarily, and with full understanding of its terms.
Employee Initials & Date
[// GUIDANCE: Retain this Acknowledgment verbatim to satisfy OWBPA requirements.]
[// GUIDANCE: Before release, confirm (i) correct Consideration and Revocation Periods, (ii) whether a group termination program requires additional disclosures (e.g., job titles and ages), and (iii) compliance with any Pennsylvania-specific closing obligations under the Wage Payment and Collection Law.]