As an employment law attorney with over 12 years of drafting and negotiating severance agreements across the United States, I’ve reviewed thousands of severance packages for employees and employers alike. One of the most frequent requests I receive is for a reliable, compliant severance pay agreement template that can be downloaded and customized quickly. That’s why I’m providing this updated 2025 version completely free, including specialized sections for California employees and workers over age 40 who require OWBPA-compliant language.
This comprehensive severance agreement template incorporates current federal requirements under the Older Workers Benefit Protection Act (OWBPA), ADEA disclosures, and California-specific provisions under the Fair Employment and Housing Act (FEHA) and Labor Code. Download links appear at the end of this article.
Important Disclaimer: This template is for informational purposes only and does not constitute legal advice. Laws change frequently, and your specific situation may require customization. Always consult a licensed employment attorney in your state before signing or presenting any severance agreement.
A well-written severance agreement protects both parties. Employees receive clear payment terms, continued benefits, and release language that prevents future lawsuits. Employers obtain a full release of claims and reduce litigation risk. According to the IRS, severance pay is taxable as wages (see IRS Topic No. 417, Earnings for Clergy and Members of Religious Orders and Publication 15), making proper tax-withholding language essential.
In my experience, the majority of disputes arise from poorly worded “do-it-yourself” templates that fail to address:
Federal law treats employees age 40 and older differently. Under the OWBPA (29 U.S.C. §626(f)), any waiver of ADEA rights must be “knowing and voluntary.” This triggers two mandatory waiting periods:
| Situation | Review Period | Revocation Period |
|---|---|---|
| Individual termination | 21 days to consider | 7 days to revoke |
| Group layoff or RIF (45+ employees affected) | 45 days to consider + detailed demographic disclosure | 7 days to revoke |
A standard severance letter template free download that lacks these provisions is legally worthless for workers over 40 – the release can be thrown out entirely by a court.
California imposes stricter rules than most states. My California severance agreement template and California severance agreement over 40 template include:
See California DFEH guidance: DFEH Sample Severance Language.
Click the links below to download Word (.docx) versions you can edit immediately:
Below is the complete text from my most popular template so you can see the level of detail before downloading:
SEVERANCE AND GENERAL RELEASE AGREEMENT
(This version is for California employees age 40+)
This Severance and General Release Agreement (“Agreement”) is entered into between [Employee Name] (“Employee”) and [Company Name] (“Employer”).
1. Separation Date. Employee’s employment will end on [Date] (“Separation Date”).
2. Severance Payment. In exchange for the promises herein, Employer will pay Employee [X] weeks/months of severance at Employee’s final base salary of $[amount], less lawful deductions. Payment will be made [lump sum / bi-weekly] beginning [date]. Severance pay will be reported on Form W-2.
3. Benefits Continuation. Employer will [pay COBRA premiums for X months / provide equivalent coverage].
4. Release of Claims. Employee releases all claims under federal, state, and local law, including but not limited to Title VII, ADEA, ADA, FEHA, California Labor Code, etc. Employee expressly waives California Civil Code §1542...
5. OWBPA/OWPA Disclosure (Age 40+).
6. California-Specific Language (Gov. Code §12964.5, AB 749, etc.).
[Full statutory language follows – 400+ words of compliant text]
7. Revocation Instructions. To revoke, deliver written notice to [Name] at [address] no later than 11:59 p.m. on the 7th day following signature.
8. Governing Law. California.
Employee acknowledges reading and understanding this entire Agreement.
Date: ______________ ______________________________