Draft Markup Of Settlement Agreement

---
name: draft-markup-of-settlement-agreement
task_id: employment-labor/draft-markup-of-settlement-agreement
description: Guides the drafter in preparing a redlined markup of an employment settlement agreement, focusing on release scope, statutory waiver requirements, tax characterization, protected-activity savings language, internal-policy review, and related issue spotting.
activates_for: [planner, solver, checker]
---

# Skill: Draft Redlined Markup of Employment Settlement Agreement

## 2. Failure modes the skill is correcting

- Drafting a broad release without isolating claims that are nonwaivable, require special waiver language, or need an express carve-out.
- Omitting required formalities for any statutory waiver of protected claims, including consultation, consideration, and revocation mechanics where applicable.
- Leaving payment terms ambiguous as to wages, severance, damages, fees, or other components, creating reporting and withholding risk.
- Using confidentiality, non-disparagement, cooperation, or no-rehire language that could be read to restrict protected communications or other protected activity.
- Failing to reconcile settlement terms with outstanding equity, deferred compensation, benefits, expense reimbursement, or earned commissions.
- Missing internal policy constraints, approval thresholds, signature authority limits, or required form language.
- Producing markup that is hard to audit because changes are not identifiable from plain text alone.
- Providing issue commentary without a clear severity judgment and without concrete next steps.

## 3. Legal frameworks / domain conventions that apply

- Release scope should be read against the governing law on contract interpretation and against any claim-specific limits on private waiver; carve out rights that cannot be waived or that must be preserved by statute or public policy.
- Any waiver of age-related or similarly protected claims must be tested against the controlling statutory waiver rule, including the required reference to rights waived, the consideration period, the revocation period, and the advice-to-consult-counsel language if applicable. Use the relevant statute and section, such as the Older Workers Benefit Protection Act / ADEA waiver rules if implicated.
- Preserve agency-charge, investigation, and cooperation rights where the governing law allows or requires it; do not draft a release to block lawful communications with regulators or protected participation.
- Tax treatment should be drafted consistently with the payment structure and the reporting obligations under the Internal Revenue Code, withholding rules, and any applicable payroll guidance; allocate each payment stream intentionally.
- Confidentiality and non-disparagement provisions should be checked against the National Labor Relations Act and any other applicable protected-activity rules; include savings language where needed.
- If equity, bonus, commission, PTO, benefits continuation, or deferred compensation is in play, align the settlement with the operative plan, award, or policy language and flag any inconsistency for business input.
- Employer policy review should cover required approvals, release form requirements, no-admission language, return-of-property obligations, COBRA or benefits procedures, and any internal settlement template constraints.

## 4. Analytical scaffolds

- Start by identifying the governing documents and the operative business records to be compared: the draft settlement, the referenced policies, and the employment record set.
- Enumerate each substantive topic in the agreement before editing it: release, waiver, payment, taxes, confidentiality, non-disparagement, cooperation, non-solicit/no-rehire, references, benefits, equity, return of property, venue, remedies, and integration.
- For each topic, ask four questions: what the draft currently says, what the governing document or law requires, what risk the current wording creates, and what revision best protects the employer while staying enforceable.
- Where the settlement touches multiple protected claim types or multiple payment streams, analyze each category separately rather than using one generic pass.
- When a statutory waiver or protected-activity restriction is implicated, cite the controlling authority in the markup comment or memo and tie the change to that authority.
- When comparing the draft against policies or employment records, flag any mismatch in dates, titles, pay status, compensation components, location, reporting line, or authority to sign.
- Use a redline convention that survives export: mark deletions, insertions, and substitutions in plain text in addition to any document styling, and attach a short rationale to each substantive change.
- In the cover memo, separate legal risks from business preferences, and distinguish mandatory fixes from negotiable edits.
- Conclude the memo with concrete recommendations, assigning each action to the appropriate internal role and timing it to the settlement approval and signature process.

## 5. Vertical / structural / temporal relationships

- Track how the agreement moves through time: pre-signing review, signature, any revocation or rescission period, payment date, tax reporting, post-termination obligations, and any continuing restrictive covenants.
- Check whether one clause depends on another, such as release effectiveness conditioned on payment, confidentiality limited by law, or a waiver provision contingent on receipt of a required consideration period.
- Ensure defined terms are used consistently across recitals, operative covenants, exhibits, and any release schedule.
- If the draft references another document or policy, confirm whether that document is incorporated, superseded, or merely consulted, and flag any unresolved hierarchy issue.
- Compare any employee-specific facts in the record to the settlement assumptions before revising the draft; do not assume one employee’s status, compensation, or benefit setup fits another’s.
- If multiple claim categories or payment components exist, keep each stream separate in drafting so the reporting and waiver treatment remains clear.

## 6. Output structure conventions

- Produce two deliverables: the redlined settlement-agreement markup first, then the cover memo to general counsel.
- The markup should read as a usable draft, not a commentary outline, and every substantive change should be visibly tagged in plain text with a brief rationale.
- Use conventional contract drafting shapes such as recitals, operative provisions, definitions, release language, statutory waiver language, tax provisions, confidentiality/non-disparagement, miscellaneous provisions, and signature blocks.
- For any issue list or markup commentary in the memo, assign an explicit severity label from a stated ordinal scale and use it consistently across entries.
- The memo should summarize the most significant issues first, then secondary issues, then open points requiring business or legal input.
- End the memo with a Recommended Actions section that uses imperative verbs, names the responsible internal role, and ties each action to a concrete milestone or urgent timing anchor.
- Ensure the primary deliverable is complete and non-empty before treating the memo as complete.