Understanding the Noncompete Agreement in Your Severance Package

One of the most common parts of a severance package in New York, New Jersey or Pennsylvania is a noncompete agreement. By having you sign this agreement, your employer is not allowing you to work for their direct competitors upon terminating your job. You have in-depth knowledge of your employer’s business, and they don’t want you to carry that information to another company.

Usually noncompete agreements do not let you work for a direct competitor for a certain amount of time in a certain geographic area. Once that time limit has expired, you are free to pursue employment from any business.

It is important to note that often noncompetition agreements are not enforceable. If the court determines that the terms of the agreement are not reasonable, then the agreement becomes void. There are three main factors that are considered when determining if the agreement is reasonable:

  • A court is more likely to find the agreement reasonable if the time limit for when you are allowed to work is reasonable. The longer your employer tries to restrict you from working with their direct competition, the more likely it is that the court will not enforce the contract.
  • Geographic area. Noncompete agreements often restrict the area in which you can search for a new job. The smaller this area, the more likely it is that the agreement will be seen as reasonable.
  • Employers must be realistic about what they consider direct competition. If the agreement includes a long list of other companies that significantly limits the job potential of employees, then the agreement will not be enforceable.

When you are offered a severance package, you may be focused on the money and benefits your employer is offering. However, it is important to read it fully. Signing a noncompete can severely limit your potential for finding a new job in the future.

An experienced severance agreement attorney at the Arcè Law Group can carefully go over every aspect of your contract to ensure that your rights are being protected. We are skilled at negotiating for your best interests in employment law cases throughout New Jersey, New York and Philadelphia. Contact us today to schedule a free initial consultation to learn more about how our dedicated legal team can help.

By Bryan Arcé | Published January 10, 2016

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