Noncompete clause may force return of severance

DEAR J.T. & DALE: I recently got laid off. They gave me two months’ severance. A week later, I was contacted by a competitor offering me a job. The problem is that my former employer says I have to pay back the severance if I take a job with any competitor within 12 months. Can they do that? If so, should I keep the money and look for an offer from a noncompetitor? — Emily

Dale: Can they do that? When it comes to legal questions, who knows? Well, we know who knows: our favorite employment attorney, Scott Gordon, of Rodey Law in Albuquerque. We asked him for an answer.

Scott: Yes, they can — but it might not be smart for the employer to do so. Generally, employers aren’t required to pay severance to laid-off workers, but some do so anyway, and one reason is to get the employee to sign a written severance agreement. Typically, that agreement provides that the employee must release all claims against the employer. In this case, the severance agreement also could have provided that the employee must repay the severance if he or she takes a similar job with a nearby competitor within a year. If Emily signed a severance agreement with that provision, then she probably is bound by it. But the employer can’t hallucinate such a noncompete provision after the fact — it had to be in the signed severance agreement. And if Emily repays the severance, the employer has no longer paid anything in exchange for the release of claims. (Contract law calls that exchange “consideration.”) In that situation, with no “consideration” to support it, the release of claims probably is not enforceable. So Emily might not have any restrictions from the severance agreement. On the other hand, if I were the employer, I’d be a little worried about canceling the former employee’s release.

Dale: Thanks, Scott. Next, assuming the noncompete language really was in the agreement, does Emily keep the money or take the job offer?

J.T.: That, to me, is an easy one. The average job search in America runs six to nine months, usually longer for people who are unemployed! So, is it worth it to pass on a full-time job offer just to get a two-month severance? My experience working with layoff victims is a big “NO.” Take the job and skip the severance!

Dear J.T. & Dale: I work a 9-to-5 job at an accounting firm. But my real passion is the theater. I have the chance to be in a play at the local theater, but it would require taking some time off from work. I don’t have enough vacation time saved up. Should I ask the company to make an exception? — Tobias

Dale: As a lover of the theater, I hope you’ll ask, and I hope the answer is not just an enthusiastic “yes,” but that your manager will look forward to attending. However, the key word in all of that is “ask.” There might be obstacles your manager sees that you don’t, like other people being out at the same time or, more worrisome, the dreaded “It would set a precedent.” So make your case, but be aware that you might be rejected, and be prepared to be big about it.

J.T.: Set a meeting with your boss, and come ready to map out exactly what time you would miss and what you could do to ensure that it wouldn’t disrupt the workflow. Anything you can do to minimize the impact of your taking time off is important. Finally, be sure to stress how much you love your job and that if he or she gives you the chance to pursue this personal goal, you will be extremely grateful and do whatever you can to make it up to the company. Hopefully, your boss will see the value in letting you pursue your passion!

Dale: But do not mention that business in your question about theater being your “real passion.” Be cool. Don’t oversell. Your boss doesn’t need to know that this could be a continuing problem and that he or she will be competing for your time and attention. Keep that just between us.