Q: Under California law, can an employer make severance pay to a laid-off employee contingent on a non-compete provision?
If a company offers severance to a laid-off employee on a monthly basis over the course of a year, but states that it will stop payments if the employee goes to work for a competitor, is such a provision enforceable?
What if the employee is based in CA but the company is based in another state?
A:
Under California Law, an employer is not obligated to provide severance pay to any employee, unless the employment contract specifies it. Therefore, an employer is within its rights to put any lawful condition on providing severance pay. You should consult with an employment law attorney before signing any such agreement to do 2 things: 1. be sure you know what you are potentially giving up in exchange for the severance payment; and 2. to be sure that the severance agreement is properly drawn up and you are not giving up any rights you cannot waive.
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Neil Pedersen agrees with this answer
A:
I am sure you are asking this question because you have read or heard somewhere that non-compete provisions as unenforceable in California. While it would be important to review the provision offered to you before giving solid legal advice, it does not sound like the provision you are being offered is the kind of non-complete provision that violates California law.
The term offered to you sounds like a provision that does not prevent you from getting another job. Rather it simply says that if you get another job, the severance stream of money from the prior company ends. As long as you are free to work elsewhere after you sign the agreement, the provision does not violate Business and Professions Code section 16600 and is lawful.
It is always a good idea to have a severance agreement reviewed by an attorney before you sign it.
Good luck to you.
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