Ask Entrepreneur

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

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.

However, 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.

Share Your Thoughts

Today's Editor's Picks

About ASK ENTREPRENEUR

Ask Entrepreneur is a question-and-answer forum for and by the Entrepreneur.com community. Send in your burning business question, or comment on someone else's now. Have a Question? Ask Now

Topics (over 1000+ answers)

Ask Entrepreneur Q&A Hangouts

Google + Hangout With Shark Tank
Google + Hangout With Jason Falls
Google + Hangout With Angela Jia Kim
Google + Hangout With Grant Cardone

ASK Quick Tips