How to prepare a contract diligence findings report for Separation Agreements

Prepare an employer-side separation agreement diligence report by establishing the operative documents, checking releases and payment conditions against applicable requirements and approved terms, and separating confirmed problems from missing evidence. Record each material finding with precise document references, distinct legal and operational assessments, supported financial consequences, and an assigned action. The deliverable is a findings register and executive summary that help counsel, HR, and finance decide which agreements need further records, legal analysis, or remediation—not a blanket certification that signed releases are enforceable.

When to use this workflow

Use this workflow for an acquisition, workforce restructuring, internal compliance review, or executive departure review involving existing separation agreements. Its purpose is to report material findings across a defined population, not renegotiate every agreement or administer severance.

Specify whether the population includes executed agreements, outstanding offers, or both. Identify the decision the report supports: transaction disclosure, assessment of outstanding obligations, corrective drafting, or further investigation. Keep unsigned offers separate from executed arrangements.

This US-oriented professional workflow addresses selected federal waiver and reporting issues. Assign separate jurisdiction-specific review for state wage, release, confidentiality, and restrictive-covenant requirements, and specialist review for NLRA coverage, benefit plans, and tax treatment. Do not use the report’s federal checks as nationwide clearance. Contract conclusions depend on the actual wording, governing law, facts, and deal context.

What you need

Collect a controlled document set:

• Agreement records: signed agreements, exhibits, amendments, approved drafts, offer history, delivery evidence, signatures, and available revocation records.
• Employee and program facts: employing entity, work locations, age, role, departure program, and pending charges or litigation.
• Economic support: payroll, existing compensation entitlements, expenses, benefit elections, equity documents, and payment evidence.
• Related instruments: employment agreements, restrictive covenants, incentive and retirement plans, indemnification arrangements, and separate releases.
• Review instructions: approved templates, negotiated exceptions, materiality criteria, decision-makers, and the employer’s own negotiation checklist.

Use the matter’s approved access process for personnel records. Prefer employee IDs in the circulated report and omit personal information unnecessary to the decision.

Use the template

Use Separation Agreements — Contract diligence findings report as the working register. You can copy this table into your working document or spreadsheet. Create one row per material issue; one employee may have several unrelated findings.

Use stable IDs that survive sorting. Identify the document version, section, page, and exhibit; for financial support, include the workbook, sheet, and cells.

Specify whether the baseline is law, an approved template, negotiated approval, or a supporting record. Distinguish verified wording, corroborated performance, unresolved interpretation, and unavailable records. Verified text does not establish performance.

Rate legal and operational risk separately under matter-specific criteria. Record supported amounts without labeling every obligation as loss exposure. Each open row needs an owner, next action, and resolution point. Place population boundaries, rating definitions, and an executive summary above the register.

Step by step

1. Define the population and reporting threshold

Reconcile the agreement list against the relevant HR departure roster and acquisition or review scope. Separate individual departures, potential group programs, executive arrangements, and settlements of filed claims. Group by jurisdiction and template vintage where useful.

Agree on reporting thresholds with the instructing lawyer. A recurring omission may be material across a population even where individual payments are modest. An authorized commercial exception is not automatically a legal defect.

Record: scope, exclusions, baseline versions, and thresholds in the report header. Enter unexplained roster gaps as findings assigned to HR or the deal team.

2. Establish the operative document set

Compare each executed agreement and exhibit with the last approved draft. Investigate changes to amounts, dates, definitions, signatures, and attachments. Mark related instruments as supplied, referenced but unavailable, or superseded.

Cross-document dependencies matter. Paragraphs 3 and 7 of the SEC-filed Arrow Electronics agreement preserve specified agreements and a retirement plan while addressing accrued rights separately. This illustrates negotiated structure, not enforceability or a universal drafting requirement. (sec.gov)

Record: operative versions, unexplained execution changes, and unavailable exhibits. Do not characterize an unseen attachment’s wording as defective.

3. Assess release coverage and waiver dependencies

Map releasing persons, released parties, claim categories, cutoff dates, unknown-claim wording, and exceptions. Check preserved benefits, enforcement rights, indemnification, and pending claims against the actual documents.

For an applicable ordinary ADEA waiver, check understandable written wording, express identification of the ADEA, written advice to consult counsel, exclusion of post-execution claims, and consideration beyond existing entitlements. These are minimum safeguards, not complete proof of knowing and voluntary execution. See 29 C.F.R. § 1625.22(b)–(d). (eeoc.gov)

The EEOC’s waiver guidance describes differing judicial approaches to other discrimination waivers, including review of surrounding circumstances. Use controlling authority for the matter; wording extraction alone cannot establish voluntariness. (eeoc.gov)

Record: the concern, relevant employee facts, source, missing evidence, and specific question assigned to employment counsel.

4. Verify timing and group-program evidence

Reconstruct final-offer, revision, delivery, execution, and revocation events. Ordinary ADEA waivers require at least 21 days for consideration, or 45 for a covered group program, and at least seven days after execution for revocation. Effectiveness awaits revocation expiry. These are consideration opportunities, not mandatory waiting periods before signing; qualifying settlements of filed ADEA charges or court actions follow separate provisions. See § 1625.22(e), (g). (eeoc.gov)

Material changes restart consideration unless the parties agree otherwise. Covered programs require written eligibility, time-limit, and specified age/job-title disclosures when consideration begins; program classification and decisional-unit scope require factual analysis under § 1625.22(e)(4), (f). (eeoc.gov)

Record: evidenced dates, disclosure versions, unresolved classification, and counsel-confirmed timing conclusions. Missing delivery evidence does not establish nondelivery.

5. Reconcile economics and continuing obligations

Separate existing compensation and benefits from incremental release consideration. Reconcile severance, insurance support, equity, expenses, and accrued leave to supporting records. Identify execution, delivery, effectiveness, compliance, offset, and tax-timing dependencies for each payment.

For example, paragraph 14 of the Arrow Electronics agreement conditions benefits on delivery and effectiveness of a separate release, subject to paragraph 11. The filing illustrates wording; it does not establish satisfaction of those conditions. (sec.gov)

For property return, cooperation, and notices, identify the responsible person, trigger, required action, and completion evidence. Separate face value, payments made, outstanding amounts, and contingent exposure to prevent double counting.

Record: reconciled amounts, source cells, unverified triggers, and payroll, benefits, or tax-review owners. A diligence uncertainty is not itself an instruction to withhold payment.

6. Read restrictions and reporting exceptions together

Review confidentiality, non-disparagement, cooperation, notification, repayment, and release clauses as a connected set. Trace exceptions through incorporated documents rather than checking only the principal confidentiality clause.

The EEOC explains that agreements cannot prevent charge filing or testimony, assistance, or participation in its proceedings. Preserving agency access does not necessarily preserve every individual monetary remedy. See its waiver guidance. (eeoc.gov)

For SEC reporting, Rule 21F-17(a) prohibits impeding direct communications concerning possible securities-law violations. The SEC’s whistleblower guidance identifies notification requirements that conflict with reporting permissions as potential violations. This does not invalidate every confidentiality obligation. (sec.gov)

Record: interacting provisions, the specific concern, applicable reporting context, and counsel’s remediation question. Assign NLRA and state-law dependencies separately.

7. Produce the findings report and decision summary

Aggregate recurring findings by program, jurisdiction, template, and execution status. Link each summary conclusion to individual rows. Identify the affected population and explain any sampling or unavailable-record limitation.

Use categories such as “no material issue identified within scope,” “additional evidence required,” and “legal remediation decision required.” Explain what evidence would change an unresolved assessment. Keep factual uncertainty distinct from legal interpretation and business acceptance of risk.

Record: recommended action, decision-maker, target resolution point, and disposition. Preserve the original finding and closure rationale; do not replace them with an unexplained “closed.”

Worked example

Fictional scenario: Alder Quay Instruments, Inc. is reviewing separation obligations before an acquisition. Employee E-17, age 54, departed during a department reduction. Executed agreement AQ-17-S provides $36,000 in incremental severance conditional on a separate release becoming effective. Payroll workbook PAY-04 identifies $9,000 paid against that commitment.

The supplied folder lacks the referenced program disclosure and separate release. Section 8 permits agency communications; section 10 requires advance notice of every government inquiry without an express agency exception. All parties, records, amounts, and clause descriptions are fictional.

The report replaces “signed agreement, remaining balance payable” with three separate decisions. Counsel needs program facts and the disclosure packet to assess the waiver. Finance has a supported arithmetic balance but an unverified trigger. The notice conflict warrants legal review independently of payment reconciliation. The first payment does not establish that the separate release was executed or became effective.

Common mistakes

• Treating signature as clearance. Verify exhibits, timing, and contractual dependencies before concluding the review.
• Calling every deviation a defect. Separate legal concerns, approved commercial exceptions, and factual errors.
• Combining earned pay and release consideration. Reconcile existing entitlements separately from additional benefits.
• Equating unavailable records with omitted conduct. Report “delivery evidence not supplied” unless evidence supports nondelivery.
• Calling severance face value loss exposure. Distinguish supported obligations, arithmetic balances, and contingent consequences.

Final quality check

Before circulation, confirm that:

• The population reconciles to the agreed roster and exclusions.
• Material findings cite operative versions, sections, pages, and relevant exhibits.
• Unavailable documents remain distinct from absent contractual wording or unproven performance.
• Legal propositions match primary sources and jurisdictional scope.
• Timing assessments use evidenced events and the correct waiver context.
• Financial totals reconcile without overlap or unsupported payment conclusions.
• Open issues have owners and actions; closed issues retain evidence and decision reasons.

Complete the workflow with DecoverAI

DecoverAI is the Legal Intelligence Platform for litigation and transactions. Its due diligence capabilities include bulk document classification to organize records and prioritize human review; tabular review supports work across documents. For targeted contract review, lawyers can select the represented party and give deal-specific instructions in Word. Findings quote and locate clauses, rank severity, and identify missing language as not present. Counsel retains source verification and legal judgment. To assess fit for your separation-agreement review, book a demo.

Frequently asked questions

Should the report include every clause?

No. Retain working evidence of review coverage, but report material deviations, dependencies, and unanswered questions. State exclusions so silence is not mistaken for approval.

Can a signed PDF establish release effectiveness?

Not by itself. Separate execution, contractual effectiveness, performance of conditions, and enforceability. Request the records needed for each conclusion rather than assigning one overall “valid” status.

How should missing group-program disclosures be reported?

Identify affected employees, the referenced packet, requested delivery evidence, and the program-classification question. Keep the assessment unresolved until records or counsel’s express disposition support closure.

Should unresolved findings stop severance payments?

Do not issue an automatic hold through the report. Assign counsel and payroll to assess actual conditions, existing obligations, applicable law, and timing before payment instructions change.

Sources

• EEOC: 29 C.F.R. § 1625.22, ADEA waiver requirements
• EEOC: Understanding Waivers of Discrimination Claims in Employee Severance Agreements
• SEC: Whistleblower Protections
• Arrow Electronics: SEC-filed Separation and Release Agreement, Exhibit 10.1

This guide is general information about legal workflows, not legal advice for any matter. It was drafted and reviewed with AI assistance. The worked example is fictional. Contract rights and procedure depend on the governing law, the actual wording, and the facts, so check the cited sources and the rules that apply in your jurisdiction before relying on it.