Non-compete & severance

I had worked 10 yrs for a insurance broker. 7 yrs into the job the comapny was acquired - the new company required me to sign a non-compete and paid me $3000 to do so. 3 years later my job was eliminated and I was paid severance and some commissions due in exchange for my signing a post-employement non-compete that included a list of clients and former clients that I was not to solicit for 3 years.

One year later my new employer has obtained one of those former clients on the list - partially with my help. This particular client company had terminated it's relationship with my former employer 11 months prior to my termination. The contact at this client had also been a professional & personal contact of mine for more than the 10 years I worked at the prior company. (I knew her before I joined the company 10 years earlier).

(To make things more interesting, my boss at this new job is a former executive of the company that had been acquired who had left at the acquisition.)

I am now being threatened with a lawsuit to pay back the severance amount (10 weeks pay and commission) due to my involvement in getting this client. Because there are no damages (this client was not a client of the former employer for almost 12 months) my old company wants my severance pay to be paid back. It amounts to about $17,000 including commissions.

The policy manual does not indicate the exact severance policy but the practice of the company had been one week per year of service.

Does my prior employer have a case against me? Need I worry? I do not have the resources to pay the severance or the costs associated with a lawsuit.

The parent company is a publicly traded national company with about 2750 employees, 80 offices and is headquarterd in Virginia - although I always worked in the Syosset, NY office.

Any help would be appreciated!

1 answer  |  asked May 29, 2003 11:00 AM [EST]  |  applies to New York

Unlock Non-Compete Agreements: Keys to Escape

Answers (1)

David M. Lira
Sometimes They Are Enforceable

Courts in New York State do not like non-compete provisions in employment agreements, and employers have a tough row to hough to get one enforced. However, the distaste that New York courts have for employment non-competes does not mean they are never enforceable.

Frankly, I cannot say whether your ex-employer has a claim against you on the non-compete. I need to know a lot more. But I can say that because you were paid money over and above your regular pay, and because the employer took the time to narrow the non-compete to specific customers, the employer's likelihood of success is higher than with many other types of non-competes.

You are now learning the problem with signing a non-compete agreement. A lot of employment attorneys will advise you to sign, telling you that more and more employers are asking for the non-competes, but very, very few actually enforce them. I don't give that advise. I say that when you sign a non-compete you are buying a lawsuit. And you have to question the ethics of an employer who has employees sign a legal document that the employer knows is likely not enforceable. Why do you want to work for someone whose ethics you can't trust?

You may well have bought yourself a lawsuit. Now, you may have to pay, either the ex-employer or an attorney to defend you in the lawsuit. You may find yourself out of a job as well.

Good luck.

If you want to more thoroughly review your situation, I invite you to call. The details of your situation should not be made the feed for a public discussion, which is what this website is about.

posted by David M. Lira  |  May 30, 2003 09:17 AM [EST]

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