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Non Compete In Severance Agreement for the United States

Non Compete In Severance Agreement Template for United States

A Non-Compete in Severance Agreement is a legal document used in the United States that combines severance compensation with post-employment competitive restrictions. The agreement's enforceability varies by state, with some jurisdictions like California largely prohibiting such restrictions while others enforce reasonable limitations. The document typically includes specific terms about severance payment, duration of non-compete obligations, geographic scope, and prohibited activities.

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Non Compete In Severance Agreement

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What is a Non Compete In Severance Agreement?

The Non-Compete in Severance Agreement is utilized when an employer wishes to protect its legitimate business interests while providing severance benefits to a departing employee. This document is particularly relevant in the United States, where enforcement varies significantly by state jurisdiction. It typically includes provisions for severance compensation, specific restrictions on competitive activities, geographic limitations, and duration of the non-compete period. The agreement is commonly used for employees with access to sensitive information, key client relationships, or specialized knowledge, balancing the employer's need for protection with the employee's right to future employment.

What sections should be included in a Non Compete In Severance Agreement?

1. Parties: Identification of employer and employee, including legal names and addresses

2. Background: Context of employment termination and basis for severance arrangement

3. Definitions: Key terms including competitive business, restricted territory, confidential information, and cause

4. Severance Payment: Details of severance compensation, including amount, timing, and conditions of payment

5. Non-Compete Obligations: Core restrictions including scope of prohibited activities, duration, and geographic limitations

6. Consideration: Statement of consideration provided for the agreement, including severance benefits

7. General Release: Employee's release of claims against the employer

8. Governing Law: Specification of applicable state law and jurisdiction

What sections are optional to include in a Non Compete In Severance Agreement?

1. Non-Solicitation: Additional restrictions on soliciting employees or customers, included when relevant to employee's role

2. Return of Property: Requirements for returning company property, included when employee had access to sensitive materials

3. Cooperation: Post-employment cooperation obligations, typically included for senior roles

4. Confidentiality: Additional confidentiality obligations, included when handling sensitive information

5. ADEA Provisions: Special provisions required for employees over 40, included when applicable

What schedules should be included in a Non Compete In Severance Agreement?

1. Schedule A - Severance Payment Details: Detailed breakdown of severance compensation and payment schedule

2. Schedule B - Restricted Territory: Geographic scope of non-compete restrictions with specific boundaries

3. Schedule C - Competitive Business Definition: Detailed description of prohibited competitive activities and companies

4. Schedule D - Company Property List: Itemized list of company property to be returned, if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Cost

Free to use
Clauses


















Industries

State-Specific Non-Compete Laws: Non-compete laws vary significantly by state. California (Cal. Bus. & Prof. Code 锟斤拷锟斤拷锟斤拷 16600) largely prohibits non-competes, while states like Florida generally enforce reasonable ones. Recent legislative changes in states like Illinois and Washington have placed additional restrictions on non-compete agreements.

FTC Proposed Rule: The Federal Trade Commission's proposed rule to ban non-compete clauses nationwide, which could significantly impact the enforceability of such agreements if finalized.

Defend Trade Secrets Act: Federal law that provides protection for trade secrets and must be considered when drafting non-compete provisions that aim to protect confidential information.

Reasonableness Doctrine: Common law principle requiring non-compete agreements to be reasonable in terms of geographic scope, duration, and scope of prohibited activities.

Consideration Requirements: Legal requirement that employees must receive adequate consideration (something of value) in exchange for signing a non-compete agreement, particularly relevant in severance context.

Age Discrimination in Employment Act (ADEA): Federal law that must be considered when drafting severance agreements for employees over 40, requiring specific language and review periods.

Older Workers Benefit Protection Act (OWBPA): Federal law requiring specific provisions and time periods for review and revocation when obtaining release of age discrimination claims in severance agreements.

Legitimate Business Interest Requirement: Legal principle requiring employers to demonstrate a legitimate business interest being protected by the non-compete provision, such as trade secrets or customer relationships.

Time Duration Restrictions: Legal limitations on the length of time a non-compete agreement can remain in effect, which varies by state and must be reasonable based on industry standards.

Geographic Scope Limitations: Restrictions on the geographic area where a non-compete can be enforced, which must be reasonable and related to the employer's business footprint.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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