This template is an executive separation agreement that sets forth the terms and conditions governing an executive's termination of employment with an employer, drafted more favorably toward the employer. This template includes practical guidance, drafting notes, and alternate and optional clauses. This template provides guidance on the terms of a standard separation agreement; however, not all provisions will be applicable to your employer-employee relationship. State law requirements may vary with respect to certain provisions, thus, you should consult local counsel. In addition, Section 409A of the Internal Revenue Code and existing contractual obligations to, and commitments by, the employee will need to be considered and may significantly constrain the ability to restructure the post-employment rights and obligations of the parties. For an executive-friendly agreement, see Executive Separation Agreement (Pro-executive). For additional practical guidance, see Executive Separation Agreement Drafting, Executive Separation Agreement Negotiation (Pro-employer), Executive Separation Agreement Negotiation (Pro-executive). Note that recent Federal Trade Commission rules will generally prohibit non-competition clauses when they become effective in mid-2024 (although existing non-competes with senior executives will remain enforceable). See Drafting Note to Section 5(f) for more information. FTC non-competition ban. The Federal Trade Commission (FTC) has finalized a rule that essentially bans the use of non-competition clauses that prohibit a worker from (or penalize them for) engaging in competitive activities in the United States after the end of the employment relationship, with retroactive effect for non-senior executives. If the rule survives legal challenges, it would: • Prohibit entering into new post-employment non-competes (or forfeiture-for-competition clauses) with workers at all levels • Prohibit enforcing existing non-competes, except for clauses affecting senior executives that were entered into prior to the effective date, and • Require employers to notify individuals subject to existing unenforceable non-competes regarding the effect of the rule. An exception applies for non-competes entered into pursuant to a bona fide sale of a business entity, the assets of a business, or a person's interest in a business entity. 89 Fed. Reg. 38,342 (May 7, 2024). Note, however, that the District Court for the Northern District of Texas set aside the rulemaking in its entirety, enjoining enforcement nationwide, on August 20, 2024, shortly before the effective date. Ryan LLC v. FTC, 2024 U.S. Dist. LEXIS 148488 (N.D. Tex. 2024). See Texas Judge Blocks FTC's Impending Ban On Noncompetes and U.S. District Court Issues Order Blocking the FTC's Non-Compete Ban Nationwide: Client Alert Digest. For a list of related content, see the Severance Benefits Resource Kit and the Departing Employees Resource Kit. To compare state and federal laws on restrictive covenants and terminations in employment agreements, see the Employee Benefits & Executive Compensation State Law Comparison Tool. Separation Agreement Precedents Following are links to some separation agreement precedents filed with the SEC: • Northrup Grumman Corp. (February 5, 2020) • API Group Corp. (September 7, 2021) • Activision Blizzard, Inc. (September 10, 2021)