Exit Agreement for the United States

Exit Agreement Template for United States

An Exit Agreement is a legally binding document that formalizes the termination of employment between an employer and employee in the United States. It outlines the terms and conditions of separation, including severance payments, benefits continuation, release of claims, and ongoing obligations. The agreement must comply with federal laws such as ADEA and OWBPA, as well as applicable state employment laws. It typically includes provisions for confidentiality, non-disparagement, and may include non-compete and non-solicitation clauses where permitted by state law.

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What is a Exit Agreement?

Exit Agreements are essential documents used when ending an employment relationship in the United States, particularly for senior positions or sensitive departures. An Exit Agreement serves to protect both employer and employee interests by clearly documenting the terms of separation, including financial arrangements, ongoing obligations, and legal releases. These agreements must carefully balance various federal and state requirements, particularly regarding age discrimination (ADEA), benefit protection (OWBPA), and state-specific employment laws. The document typically includes severance terms, benefits continuation, confidentiality provisions, and release of claims. Special attention must be paid to state-specific requirements regarding non-compete clauses and consideration periods.

What sections should be included in a Exit Agreement?

1. Parties: Identification of the employer and departing employee

2. Background: Context of employment and reason for separation

3. Definitions: Key terms used throughout the agreement

4. Separation Date: Official termination date and final day of employment

5. Severance Payment: Amount, timing, and conditions of severance compensation

6. Release of Claims: Employee's waiver of legal claims against employer

7. Confidentiality: Ongoing obligations regarding company information

8. Return of Property: Process for returning company assets

What sections are optional to include in a Exit Agreement?

1. Non-Compete: Restrictions on future employment in competing businesses

2. Non-Solicitation: Restrictions on soliciting employees or customers after departure

3. Outplacement Services: Details of career transition assistance if provided

4. Equity Compensation: Treatment of outstanding stock options, RSUs, or other equity compensation

What schedules should be included in a Exit Agreement?

1. Schedule A - Payment Schedule: Detailed breakdown of severance payments and timing

2. Schedule B - Benefits Continuation: Details of continued benefits coverage and duration

3. Schedule C - Company Property: Itemized list of company property to be returned

4. Appendix A - Release of Claims: Detailed release language required by state and federal law

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Genie AI

Cost

Free to use
Clauses
Industries

ADEA: Age Discrimination in Employment Act - Federal law protecting employees 40 and older from age-based discrimination, requiring specific provisions in separation agreements

OWBPA: Older Workers Benefit Protection Act - Amendment to ADEA that sets specific requirements for waivers of age discrimination claims, including 21/45-day review periods and 7-day revocation period

Title VII: Title VII of the Civil Rights Act - Prohibits discrimination based on race, color, religion, sex, and national origin; must be considered in release of claims provisions

ADA: Americans with Disabilities Act - Protects against disability discrimination; must be addressed in release language

FLSA: Fair Labor Standards Act - Governs wage and hour requirements; crucial for calculating final pay and any overtime obligations

NLRA: National Labor Relations Act - Protects employees' rights to discuss working conditions; affects confidentiality provisions in exit agreements

ERISA: Employee Retirement Income Security Act - Governs employee benefits plans; important for addressing continuation or termination of benefits

State Labor Laws: Various state-specific employment regulations that may affect severance, non-compete agreements, and final wage payment requirements

Securities Laws: Including Securities Exchange Act and SEC regulations - Particularly important for public companies and executives with stock-based compensation

IRC 409A: Internal Revenue Code Section 409A - Governs deferred compensation arrangements and timing of severance payments

IRC 280G: Internal Revenue Code Section 280G - Addresses golden parachute payments and their tax implications for both employer and employee

Company Policies: Internal company policies and procedures that may affect separation terms and conditions

Existing Agreements: Prior employment agreements, equity agreements, and other contracts that need to be addressed in the exit agreement

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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