Noncompetition, Severance Agreements & Other Employment Contracts
“After I got fired, my employer wanted me to sign an agreement. They offered to give me a few weeks of pay if I signed the agreement, but I’m not sure what I would be giving up by signing it.”
Employers have a significant advantage over employees when it comes to contracts and other agreements. In addition to generally having more leverage, employers also have access to greater resources and experienced attorneys. Employees can sometimes feel pressured into signing employment agreements without properly examining the agreements. These agreements can later prevent the employee from filing a legitimate claim, working for a different employer, or using a product that the employee developed.
Employers sometimes provide discharged employees with a severance agreement offering some amount of compensation in exchange for a number of commitments by the departing employee, often including a release of any legal claims the employee may have against the employer. Employees sometimes feel pressured to sign the agreement without taking the time to analyze the agreement’s provisions or attempt to negotiate a better deal. Before signing an agreement that would eliminate their right to initiate legal action, some employees prefer to gain a greater understanding of whether they would be waiving a strong legal claim.
We frequently assist employees in analyzing proposed severance agreements, evaluating their legal rights, and, when appropriate, negotiating with employers to ensure that any severance arrangement is fair.
Noncompetition agreements are becoming more common in the employment context. Commonly, these agreements prevent a former employee from working for a direct competitor of the former employer for a set period of time. These agreements also often incorporate non-solicitation restrictions, which can prevent a former employee from soliciting or doing business with their former employers customers and employees. Many agreements also contain confidentiality provisions, which can prevent the former employee from using any data or programs the employer used in its business.
Importantly noncompetition agreements are not always enforceable by a former employer. As a general rule, noncompetition agreements must meet two tests in order to be enforceable: (1) the employer must have a legitimate business reason for enforcing the noncompetition agreement and (2) the noncompetition agreement must be reasonably tailored to that reason. Legitimate business reasons have sometimes been held to include protecting trade secrets or client goodwill. However, it may be more difficult for employers to restrict the post-employment activities who did not have significant access to confidential information or client goodwill. Furthermore, a noncompetition agreement may be found to be invalid if it is not reasonably tailored in scope and duration and instead contains overly broad restrictions.
In addition to these general rules, specific state laws may create varying levels of protections for employees with regard to noncompetition agreements.
We regularly provide advice related to the enforceability of noncompetition agreements, assist in the negotiation of agreements, and provide representation to employees who are accused of violating noncompetition restrictions.
Employees often find it helpful to consult with an experienced attorney related to any proposed or previously signed noncompetition agreement presented in the context of employment.
Employment contracts are often drafted by the employer’s attorneys and may not be drafted with the intention of maximizing the benefits and rights of the employee. When presented with a contract, employees often find it beneficial to review that contract with an attorney in order to ensure that they fully understand the terms of the employment arrangement being proposed. We assist employees and prospective employees in evaluating employment contracts presented to them.
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If your employer provided you with a severance or noncompetition agreement or any other employment contract, don’t hesitate to contact Wyatt & Associates. Our experienced and compassionate attorneys will sit down with you and take the time to listen to your story and read through the agreements. We’ll provide our advice on the enforceability of the agreements and explain what you may be giving up by signing the agreement. In the event that you want us to help negotiate with your employer, we will use our experience to negotiate the best possible deal. If you have already signed a noncompetition agreement and are being threatened or sued by your former employer, our experienced attorneys will zealously defend your rights.