Is it legal to ask an employee to sign a non-compete after termination and withhold severance pay until they do so?

UPDATED: Sep 30, 2022

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Is it legal to ask an employee to sign a non-compete after termination and withhold severance pay until they do so?

I was recently terminated from a job where I had never been asked to sign a
non-compete before or during employment. At the time of severance, I
entered into an oral agreement to receive severance pay. Since that time, I
have been presented with legal documentation from the company that states
that I will need to sign a non-compete in order to receive my severance. Can
they do this?

Asked on July 17, 2017 under Employment Labor Law, Illinois


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Yes, this is legal UNLESS you had a written employment contract guarantying you severance; if you did, your employer has to honor it (and if they do not, you could sue them for "breach of contract" for whatever you are entitled to under the contract). In the absence of a written contract giving you severance, all severance is voluntary on the part of an employer, and a noncontractual promise to provide severance is not legally binding or enforceable. Your employer can require you to sign non-competition or other agreement as a condition of getting severance; for your part, you can refuse to sign, if you value being able to potentially compete more than you value this amount of severance.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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