What is the law regarding severance and non-compete agreement?
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What is the law regarding severance and non-compete agreement?
My company laid me off after 15 years and has offered 14 weeks of severance in exchange for a 1 year non-compete agreement. It states that I cannot work in the same industry for that year. A friend has suggested that they cannot enforce the non-compete after they stop paying me. Can they prevent me from being employed in the only industry that I have worked in for 23 years after they stop paying me?
Asked on June 21, 2019 under Employment Labor Law, Illinois
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 4 years ago | Contributor
Your friend is wrong. There is no legal obligation to pay severance and no legal right to receive it; it is purely voluntary for them to offer it to you. Since you don't have a right to it, if you accept it in exchange for the noncompete, you will have accepted and received good "consideration" (a thing of value), which is sufficient to create a contract and make the agreement binding. There is no rule that the length or amount of payment must match the other side's (i.e. your) promises: for example, people regularly give up the right to sue when they could potentially receive hundreds of thousands of dollars if they go to trial and win in exchange for several thousand or maybe a very few tens of thousands of dollars in a settlement. Notwithstanding that they give up more than they get, the agreement is binding. Similarly, you can give up the right to compete for a full year in exchange for 14 weeks severance. You have to decide if that tradeoff is worth it or not for you.
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