Employee Separation & Non-Disparagement Agreement
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Businesses need protection from negative or defamatory statements on Glassdoor and other sites. Given the current growing reality of anonymous reviews of businesses by disgruntled former employees on websites such as Glassdoor, employers are increasingly seeking preemptive legal strategies as to how they can protect themselves. These employers recognize that anonymous reviews on such sites can damage a business' ability not only to gain new clients but also to recruit talent. According to a survey, "70 percent of people now look to reviews before they make career decisions." A properly worded non-disparagement agreement aims to provide the employer with an effective vehicle by which to deter a former employee from bad-mouthing it. A claim against a former employee who has posted a negative review online is possible on the grounds of a breach of confidentiality agreement, breach of contract, or defamation. (We recommend reading a brief summary of the case L Technologies Inc. v. Does 1-7.) Our separation agreement, which contemplates these matters, is a necessary component of such a strategy.
A non-disparagement clause, coupled with a liquidated damages clause, may help to deter former employees from posting damaging comments online. Breaching a legally enforceable agreement not to make disparaging comments about one's prior employer can prove costly to the breaching party, and the existence of such a clause in a Separation Agreement may cause him or her to think twice before breaching. Glassdoor will unmask the author of an anonymous review on its site, provided that the business proves that it has a “prima facie” claim (legalese that means evidence must be presented to show the claim is valid on its face). Attorney Shep Davidson of the law firm Burns & Levinson has provided analysis as to the best practices for drafting effective non-disparagement and liquidated damages clauses -- advice that we have endeavored to follow in preparing this agreement.
What is an appropriate severance payment? Severance amounts vary substantially depending on the industry and the position held. However, severance compensation equivalent to one or two weeks of base salary multiplied by the number of years of employment, with a maximum of 52 weeks of severance, is one approach. Payments to the employee can continue in the form of salary continuance under the company’s normal payroll cycle, as our form below provides, or the company can offer to pay in a lump sum. Eligibility for severance assumes that the employer initiated the termination and that the employee did not leave on his or her accord, in which case it is uncommon to offer an employee severance unless the employer seeks the benefits afforded under the terms of the separation agreement. One common criterion for an employee’s eligibility is the relocation of the company’s office, placing an undue burden on the employee. (For example, the company relocated more than thirty miles from its prior site.) Additional possible severance benefits include health or dental insurance, career transition or outplacement services, and incentive compensation payments.
[City, State, Zip]
Re: Separation, Severance, Non-Disparagement, and General Release
This letter proposes the following Separation Agreement and General Release ("Agreement") between you and ___________________________ ("Company") regarding the terms of your separation from the Company.
A. You were employed by the Company as ___________________________ [job title]. You and the Company have agreed to terminate your employment relationship on an amicable basis.
B. On ___________________________ [date of termination], your employment with the Company terminated.
II. Terms of Agreement
To effectuate the termination of your employment and to provide you with certain benefits that you would not otherwise be entitled to, you and the Company agree as follows:
1. This Agreement shall not be in any way construed as an admission by the Company that it has acted wrongfully with respect to you or any other person, or that you have any rights whatsoever against the Company.
2. Even if you do not sign this Agreement, the Company will pay you the compensation that you have earned through the date of your termination, any accrued vacation benefits, and ________________________________ [insert name of the profit sharing, etc. plan, if any] in accordance with the terms and conditions of such plan. Similarly, even if you do not sign this Agreement, you will be offered benefits to which you are entitled under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), and you retain all benefits under the Company's 401(k) Plan.
3. In exchange for the promises contained in this Agreement and release of claims as set forth below, and provided that you sign this agreement and return it to me by ____________________ [21 days from date of letter], 20_____ and do not revoke this Agreement as set forth in Paragraph 13(d):
a. The Company will pay you a severance allowance in the amount of your current base monthly salary of $________________ [insert employee's monthly salary] beginning ________________ [beginning date of severance], and ending ________________ [ending date of severance] to be paid on a ________________ [specify the period of the company's normal payroll cycle, e.g., "monthly" or "bi-weekly"] basis and in accordance with the Company's normal payroll process.
b. The Company will pay for your medical coverage (i.e., COBRA benefits) under the ________________ [Group Health Insurance Plan, insert correct name of Company's health plan].
c. If you wish, the Company will pay for an outplacement service (to be selected by the Company) for services rendered in assisting you in locating another job, for a period of _______ months following the date of your termination or until you begin working for another employer, whichever occurs first. These payments are contingent upon your cooperation with the outplacement service and upon active efforts by you to locate another position.
4. In consideration of the promises contained in this Agreement, you agree:
a. On behalf of yourself and anyone claiming through you, irrevocably and unconditionally to release, acquit and forever discharge the Company and/or its parent corporation, subsidiaries, divisions, predecessors, successors and assigns, as well as each's past and present officers, directors, employees, shareholders, trustees, joint venturers, partners, and anyone claiming through them (hereinafter "Releasees" collectively), in each's individual and/or corporate capacities, from any and all claims, liabilities, promises, actions, damages and the like, known or unknown, which you ever had against any of the Releasees arising out of or relating to your employment with the Company and/or the termination of your employment with the Company. Said claims include, but are not limited to any and all claims arising under federal, state or local laws prohibiting employment discrimination; claims arising under severance plans and contracts; and claims growing out of any legal restrictions on the Company’s rights to terminate its employees or to take any other employment action, whether statutory, contractual or arising under common law or case law. You specifically acknowledge and agree that you are releasing any and all rights under federal, state and local employment laws including without limitation the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964 (relating to protection from discrimination, harassment, and retaliation on the basis of race, color, religion, sex, or national origin), 42 U.S.C. § 1981, the Americans With Disabilities Act, the Family and Medical Leave Act, the Genetic Information Nondiscrimination Act, the anti-retaliation provisions of the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Equal Pay Act, the Lilly Ledbetter Fair Pay Act, the Occupational Safety and Health Act, the Sarbanes-Oxley Act, the Worker Adjustment and Retraining Notification Act, the Uniformed Services Employment and Reemployment Rights Act, the Employee Polygraph Protection Act, the Fair Credit Reporting Act, common law torts (including but not limited to intentional or negligent infliction of emotional distress and invasion of privacy), any claims or causes of action arising out of any express or implied written or oral communication that the Company has made, and any and all other local, state, and federal law claims arising under statute or common law. You agree that this release is a general one, and it is to be broadly construed as a release of all claims, except those that cannot be released by law.
b. That you shall not bring any legal action against any of the Releasees for any claim waived and released under this Agreement and that you represent and warrant that no such claim has been filed to date. You agree that should you bring any type of administrative or legal action arising out of claims waived under this Agreement, you will bear all legal fees and costs, including those of the Releasees. Finally, if you sue in court or file a complaint about any employment-related claim or entitlement against the Company, you agree that this Agreement will give the Company a complete defense.
5. You agree to refer any and all reference checks to the __________________________ [insert "Director of Human Resources" or other appropriate contact], and you know that any such references will be limited to confirmation of your dates of employment and last position held. The obligation under this Paragraph is separable and any failure by the Company to perform the obligation in this Paragraph will only give rise to an action to enforce this Paragraph.
6. You agree that you will not, directly or indirectly, disclose the fact of and terms of this Agreement, including the severance benefits, to anyone other than your attorney, except to the extent such disclosure may be required for accounting or tax reporting purposes or as otherwise required by law.
7. This Agreement shall be binding on the parties and upon their heirs, administrators, representatives, executors, successors and assigns and shall inure to their benefit and to that of their heirs, administrators, representatives, executors, successors and assigns.
8. On or before ____________________ [insert deadline date for return of Company's property], you will return to me all of the Company's property in your possession including, but not limited to, ____________________________________ [insert appropriate materials, such as customer lists, mailing lists, account information, samples, prototypes, price lists and pricing information] any cellular phone, automobile, and all of the tangible and intangible property belonging to the Company and relating to your employment with the Company. You further represent and warrant that you have not retained any copies, electronic or otherwise, of such property.
9. You will cooperate fully with the Company in its defense of or other participation in any administrative, judicial or other proceeding arising from any charge, complaint or other action which has been or may be filed.
10. You will continue to comply with the terms of the ___________________________ [insert precise title of the Confidentiality Agreement, if any, signed by employee] between you and the Company, executed on _______________________ [date], and know and understand that the obligations contained in that agreement survive execution of this Agreement and your termination of employment. In particular, you shall not disclose any confidential or proprietary information (specifically including pricing, margins, key customer contacts and their profiles not generally known to the public) which you acquired as an employee of the Company to any other person or entity, or use such information in any manner that is detrimental to the interest of the Company. A copy of your Confidentiality Agreement is attached as Exhibit 1.
11. You agree that you will not make any comments relating to the Company as follows:
a. Except as it may be required by law or legal process, you agree not to disparage the Company or any of its officers, directors, shareholders, investors, potential investors, partners, predecessors, subsidiaries, employees, consultants, attorneys, or any others associated with the Company, by any means including but not limited to (i) postings to blogs, social media, industry websites, employer review websites (for example, Glassdoor or Indeed), consumer review websites (for example, Google Reviews or Yelp); or (ii) communications with accountants, investment bankers, commercial bankers, insurance brokers or carriers, media, journalists, reporters, equity analysts, investors, potential investors, customers, suppliers, competitors, joint venture partners and regulators (including but not limited to the Securities and Exchange Commission or the United States Department of Commerce).
b. For purposes of this Agreement, "disparage" shall mean any negative statement, whether written or oral, about ________________________________ [insert the full list of people, companies, products, etc. that are reasonably associated with the Employee’s scope of work]. However, nothing contained in this Agreement is intended to or shall limit your ability or right to: (i) respond to a lawful subpoena; (ii) disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment or any other unlawful or potentially unlawful conduct; (iii) file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission ("Government Agencies"); (iv) communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company; (v) receive an award for information provided to any Government Agencies; or (vi) comply with any other legal obligation.
c. The parties agree that if a breach were to occur, it would be difficult to determine actual damages. Based on what the parties presently know [include specifics here if possible], the parties agree that $________________ [insert exact figure of the amount of liquidated damages; this figure must be an amount deemed reasonable given the employee's work; a court will strike this provision if the amount is excessive] is a reasonable estimate of the damages that would accrue if a breach occurred in the future. The parties agree that the amount of liquidated damages is fair and reasonable and would not act as a penalty to the breaching party.
d. The parties agree that this non-disparagement provision is a material term of this Agreement, the absence of which would have resulted in the Company's refusal to enter into this Agreement.
12. In the event that you breach any of your obligations under Paragraphs 8 through 11, any outstanding obligations of the Company hereunder shall immediately terminate, and any payments previously made to you pursuant to Paragraph 3 shall be returned to the Company.
13. You also acknowledge that you have been informed pursuant to the federal Older Workers Benefit Protection Act of 1990 that:
a. You have the right to consult with an attorney before signing this Agreement;
b. You do not waive rights or claims under the federal Age Discrimination in Employment Act that may arise after the date this waiver is executed.
c. You have twenty-one (21) days from the date of this letter to consider this Agreement;
d. You have seven (7) days after signing this Agreement to revoke the Agreement, and the Agreement will not be effective until that revocation period has expired.
14. You agree that signing this Agreement does not mean that anyone did anything wrong. You acknowledge, understand and agree that neither you nor the Company admits any wrongdoing or liability of any sort, and that this Agreement is made to end any issue concerning any claim you have, or believe you have, against the Company. You agree that the Company is providing the severance allowance and benefits referred to in Paragraph 3 voluntarily. The Company is not obligated by any policy or commitment, or any other obligation, express or implied, to give you the payments and benefits described in Paragraph 3, except as provided in this Agreement.
15. The provisions of this Agreement are severable. If any provision is held to be invalid or unenforceable, it shall not affect the validity or enforceability of any other provision.
16. This Agreement sets forth the entire agreement between you and the Company and supersedes any and all prior oral or written agreements or understandings between you and the Company concerning the subject matter of this Agreement. This Agreement may not be altered, amended or modified, except by a further written document signed by you and the Company. Signatures affixed to this Agreement may be delivered by e-mail in PDF form, and any such signatures shall be deemed original signatures for purposes of the validity and enforceability of this Agreement.
17. [If appropriate, include arbitration clause.]
18. You represent that you fully understand your right to review all aspects of this Agreement with an attorney of your choice, that you have had the opportunity to consult with an attorney of your choice, that you have carefully read and fully understand all the provisions of this Agreement and that you are freely, knowingly and voluntarily entering into this Agreement.
If you are willing to enter into this Agreement, please signify your acceptance in the space indicated below, and return to me by ___________________ [21 days from date of letter], 20______. As I noted earlier, this Agreement will not become effective, and none of the severance benefits in Paragraph 3 will be paid, until seven (7) days after the date you sign this Agreement.
PLEASE READ CAREFULLY. YOU ARE GIVING UP ANY LEGAL CLAIMS THAT YOU HAVE AGAINST THE COMPANY BY SIGNING THIS AGREEMENT.
Very truly yours,
Accepted and agreed to on this _____ day of __________________, 20_____.
I do or do not (circle one) elect outplacement services pursuant to Paragraph 3(c).
Witness: _____________________________ Date:____________________
Other Forms You May Need
- Employee Non-Compete Agreement
- Employee Non-Disclosure Agreement
- Employment, Non-Disparagement, Confidentiality & Non-Competition Agreement
- Application for Employment
- Letter of Resignation from Employment with Acknowledgment
Instant Download - Only $9.99
- Professional MS Word & PDF formatting
- Fully editable & reusable
- Lifetime updates
- Accuracy guarantee