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Employment,Contracts,Non Compete, Non Solicit

Tips for Severance Letter--Dealing with Non-Competes and Non-Solicits when Terminated

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Typically, an employer sends a letter to a terminated employee which asks the employee to release the company from all claims they can think of and then some. And if the employee signs that letter, she or he has to abide by all the confidentitality, non solicit and non compete covenants (obligations) mentioned in that letter.

Unless employees think they have some claim against the employer (contact atttorney if you do), most sign the letter in a rush to get severance, start looking for a new job and get the severance ordeal behind them. 

Not so fast.

Your severance issues may not be over--given the importance of IP and trade secrets, you are likely to have to disclose your non compete and non solicit with your former company to all prospective employers.

1. Don't Sign Severance Letter in a Hurry without Advice and without thought of future consequences. New Employers Now Want to Know Your Non Compete and Non Solicit Agreements and May Want Indemnity from You. They now want to know whether you are subject to non compete and non solicit provisions with past employers. That severance agreement now matters. And a new employer may even ask you to indemnify, i.e. pick up the new employer's tab for legal fees and damages, for any claims made by the old employer on non compete and non solicit agreements.

2. Ask for Release from Past Employer.  Before you sign a severance letter, ask your employer to release you in writing from any prior non compete or non solicit and/or to strike those provisions from your letter (make sure they state they have the authority to do so in the letter). 

3. Reasons for Getting Release. Why should your employer release you from those terms? The employer doesn't want you to sue and you have to have consideration to sign their release letter terminating you. Point out part of your consideration for releasing the company is the release/removal of non compete and non solicit terms. If the employer says no because they don't want you stealing company trade secrets or customers, remind them that you are still bound by confidentiality obligations listed in the severance letter and/or in earlier agreements and policies. And unless you are an executive or hot shot salesperson, you may want to point out that the non compete and non solicit don't likely apply to you in the first place. Also, be aware those provisions may not clearly define what business you cannot compete against or whom you may not solicit, may include an unreasonable time period and/or too broad a geographic scope--check with a lawyer on these items. 

Remember, if you don't ask for a release of your non compete and non solicit, you won't get them. If the company refuses, you need to talk to an attorney.  Contact us if you need further help.
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