The Severance Pay Trap
One of the first things I look for in a severance agreement is a non-compete clause. They should always be removed – or if the company insists on keeping the clause in the agreement, you should either not sign it or make sure you are paid handsomely for it.
These clauses are sneaky because people often do not notice them. Worse, courts may actually enforce a non-compete agreement if extra money is paid for it – even a small severance payment can count.
Courts typically are reluctant to enforce a non-compete agreement against a person who was terminated. But, if the non-compete is part of a severance agreement, then the court is more likely to enforce it. So if you are reviewing a severance agreement, make sure yours does not include a non-compete clause. If your severance agreement includes a non-compete clause, ask your company to remove it. Many companies will remove them if you ask. If the company will not remove the clause, then think about walking away because it might not be worth signing it.
