Is a severance package with an attached non-compete clause legal?

ByNina Kaufman

Opinions expressed by Entrepreneur contributors are their own.

I live in California and my employer is offering me severance pay, but in order to receive it I must sign a non-compete clause for two years. Is this legal?
Generally, you can't get something for nothing. If it's part of your employer's regular policy to offer severance pay, your employer is not "sweetening the pot" in any way and you have no obligation to agree to the non-compete clause.

然而, courts tend not to like non-compete clauses even under the best of circumstances because they're designed to keep you out of work in the field you know best. Unless you're being offered substantial sums of money and the non-compete is very narrowly drawn, it's questionable whether a court would uphold it. But you don't want to have to wait for a court to rule on the situation before you know. And different states have different degrees of tolerance for them (California tends to be pro-employee, so you're fortunate there).

Have an employment law specialist in your area (find one who focuses on the employee, not management/employer, side) review the non-compete agreement with you.
Wavy Line

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under herAsk The Business Lawyerbrand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes theMaking It Legalblog.

Editor's Pick

Business News

Kristen Bell and Dax Shepard's Family 'Stranded' at Boston Airport During 9-Hour Delay: 'We Made Quite a Home Here'

The actors spent $600 on pillows and blankets while waiting for their flight.

Business News

McDonald's Is Launching a Spinoff Restaurant Chain Based on a Beloved, Blast-From-the-Past Mascot

The company saw a lot of success with another former mascot, Grimace, in June.

Science & Technology

This Is the New ChatGPT Trend That Will Enhance Your Business

ChatGPT plugins are becoming the new cool trend among entrepreneurs to enhance their businesses and engage more customers. Here are some insights into how they're impacting business enterprises, along with some potential risks that may accompany the benefits.

Business News

Netflix is Hiring an AI-Focused Role—and the Starting Salary is up to $900,000

The streaming giant is looking for a leader in its machine learning department.

Innovation

68% of the World Will Soon Live in Urban Areas — Are Smart Cities the Future for Humanity?

Is Saudi Arabia's NEOM a vision or a mirage? Discover the transformative power of smart cities.