If you haven't sign a non compete initially and now you are laid off with servent pay of 4 months and they are asking you to sign an no compete for one year is that legal?

My husband was laid off and was told he will get 4 month servent pay a week latter they told him that he has to sign a non compete form or he won't get his 4 month pay and the non compete is for one year is that legal

1 answer  |  asked Jan 3, 2015 06:13 AM [EST]  |  applies to Maryland

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Answers (1)

Neil Klingshirn
By way of general information (I am not a licensed lawyer in Maryland), the only "unlawful" contracts are those whose purpose is against public policy, like a murder for hire contract. If a contract is unlawful, then courts will not enforce it.

A non-compete for severance pay is not unlawful. That is, courts will not refuse to enforce it because of the subjects of the bargain (severance pay for a non-compete). The real question is whether a non-compete for severance pay contract is unenforceable for any other reason.

The answer is probably not, unless the company has a severance pay plan that says your husband is entitled to four weeks of severance due to his layoff, AND that severance pay plan does not require a non-compete as a condition of receiving the severance pay. Under those circumstances, the "no new consideration" rule could make the contract unenforceable. That is, if your husband only receives that to which he is already entitled, like his final pay, in exchange for the non-compete, then he may not have received anything for it, making it unenforceable.

Here is more information about employment contracts: http://www.myemploymentlawyer.com/wiki/The-Role-of-Contracts-in-Employment-Law.htm

posted by Neil Klingshirn  |  Jan 3, 2015 09:11 AM [EST]

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