Answers to tough HR questions: Putting non-compete in severance package
Our team of experts fields real-life, everyday questions from HR managers and gives practical answers that can be applied by any HR pro in the same situation. Today’s topic: Asking laid-off employees to sign a non-compete in exchange for severance pay.
Question: We’re letting an employee go and want to reach a severance agreement with her. Can we include a non-compete agreement as part of the package?
Answer: If you do, you might have a hard time enforcing the agreement, says employment law attorney Michael Greco. Generally, when you have someone sign a non-compete, you’re saying you have a valuable employee the company helped train, and you have a legitimate interest to protect by keeping the person away from competitors.
But if you’re letting an employee go, it can be hard to make the case that the employee has value and would damage the company by working somewhere else.
That said, some courts might rule that giving a financial incentive in exchange for signing the document is enough to hold the employee to it, even if he or she was terminated involuntarily.
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