Separation and Release of Claims Agreement (TX)
This is a Texas-specific Separation and Release of Claims Agreement. Separation and release of claims agreements are sometimes referred to as a release, waiver and release, or severance agreement. This Texas -specific separation and release of claims agreement specifies certain terms of an employee’s separation from employment. Such terms include a release of legal claims against the employer in exchange for a benefit the employee is not otherwise entitled to receive. This agreement assumes no other entitlement to separation pay or benefits, whether by prior agreement, group plan, employer practice, or for any other reason.
Using a separation and release of claims agreement provides several benefits, including:
- Minimizing the risk of litigation by the employee following separation.
- Binding the employee to new post-termination restrictive covenants to which the employee was not previously bound.
- Reminding the employee of continuing obligations under any existing restrictive covenants and having the employee re-acknowledge those obligations.
Separation and release of claims agreements can be used regardless of the reason for an employee’s separation from employment. This agreement may be used for voluntary or involuntary separations and for single terminations or group terminations. For example, a group termination may be a reduction in force. However, separation agreements must meet certain specified requirements when used with employees aged 40 or older to release claims under the federal Age Discrimination in Employment Act (ADEA). Employers must meet additional requirements when terminating these employees as part of a group termination program or offering an exit incentive to two or more employees.
Some claims under federal and Texas law cannot be released regardless of any benefit offered in exchange for the release. Examples include such as unemployment insurance compensation and workers’ compensation claims. Other claims can be released only under particular circumstances.
Many provisions in separation and other agreements that historically were considered routine and boilerplate have also been scrutinized by the National Labor Relations Board (NLRB). Recent NLRB decisions and guidance suggest that non-disparagement and confidentiality provisions, even when imposed on individuals no longer employed, may be viewed as interfering with employees’ Section 7 rights under the National Labor Relations Act (NLRA).
Confidentiality provisions in settlement and severance agreements have also come under recent scrutiny by securities regulators, such as the Securities and Exchange Commission (SEC).
In the wake of the #MeToo movement, several jurisdictions have passed or are considering laws that restrict an employer’s ability to require employees to abide by confidentiality provisions when settling sexual harassment claims. Employers entering into a separation agreement to resolve claims or allegations of sexual harassment should keep abreast of these laws and the requirements in those jurisdictions where they employ workers.
This Agreement is intended for use with a departing employee who has not yet filed any charges or legal claims against the employer. If any charges or lawsuits are pending, the employer should use a settlement and release agreement.
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