When you are about to lose your job, sometimes your employer may offer you a severance agreement to offset your temporary loss of income but also for self-serving reasons
None-Compete Clause
A non-compete clause prevents you from competing with your previous employer in the same type of business. These clauses can be held valid and enforceable. However, there is a public policy of not restricting someone from earning a living. In this regard, a non-compete clause, to be enforceable, cannot:
- Be too broad in its scope – meaning that, for example, if your past employer made women’s shoes, but you would like to start your line of menswear, including men’s shoes, this would be considered permissive, and your past employer will not be able to stop you from competing.
- Be too long in its term – meaning the period of the restricting provision must be limited in duration. The courts have held that two years is a reasonable time.
- Be too broad geographically – meaning your past employer might be able to stop you from opening your competing business within the same city but will be unable to restrict you from competing in other locations. The courts have held that a 25-mile radius is reasonable.
- Note: The above rule regarding geographical locations is changing since many businesses are online and are not limited to geographical limits.
Severance agreements often include a release of all claims against your employer:
- Employers are notorious for offering severance packages that include a release of all claims provision which requires you to forfeit all legal rights you may have against your employer resulting from your employment with the company.
- Even if you were not aware of possible violations that were made against you by the employer during your employment with the company.
- Sometimes the employer, knowing their potential legal exposure has decided that paying you a severance now is far cheaper than having to pay damages to you later should you choose to later sue your former employer.
- It is precisely for this reason, that you should consult with an employment lawyer before signing any severance package.
