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California Separation Agreement

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  • California Separation Agreement

    As part of a separation agreement, (ie. I get a severance package) my employer will write into the agreement that I can not work for the company they are outsourcing their work to for up to a year.

    I think this is illegal. They will try and prevent me from obtaining work at the outsourcing company. That doesn't even make sense since it will actually benefit both companies in the end. What judge would uphold that agreement?

  • #2
    There isn't a requirement for your employer to provide you a severence package unless you have a bona fide contract or are part of a cba stating so. With that being said, it isn't illegal and who knows what a judge will do, but my guess is, if you agree to it and sign it, a judge just might uphold the agreement. Your best bet is to a local employment attorney review the agreement and get their advise on it.
    Somedays you're the windshield and somedays you're the bug.

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    • #3
      Originally posted by hex101 View Post
      What judge would uphold that agreement?
      Would you rather get the severance pay OR work for the other company? Looks to me like it is your choice.
      Senior Professional in Human Resources and Certified Staffing Professional with over 30 years experience. Any advice provided is based upon experience and education, but does not constitute legal advice.

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      • #4
        I would rather get severance AND then work for the other company. I don't think the agreement will hold up if challenged.

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        • #5
          Originally posted by hex101 View Post
          I would rather get severance AND then work for the other company. I don't think the agreement will hold up if challenged.
          I don't agree with you. This is not a blanket non-compete prohibiting you from working in your profession PLUS you accepted money to NOT work for ONE company. You don't have a case, but don't trust me. See a lawyer.
          Senior Professional in Human Resources and Certified Staffing Professional with over 30 years experience. Any advice provided is based upon experience and education, but does not constitute legal advice.

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          • #6
            Employers don't have to offer a severance package (unless it is in an employment contract) but if they do, putting a condition on taking the severance may very well hold up in court. If you sign, you agree to the terms of the severance agreement.

            However, do have an attorney review the agreement.
            Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

            Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

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            • #7
              Actually, that agreement is totally 100% illegal in California, under CA Business and Professions Code 16600. Additionally, CA courts flat out reject the inevitable disclosure docterine, so the trade secrets exception does not apply. Do a little research guys...


              Sign the agreement, cash the check, and do whatever the heck you want. Since the contract is void by statute, the company can't recover the money.

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              • #8
                Ca. - Restrictive convenants that prohibit an individual from pursuing an "entire business, trade, or profession..." are invalid. The general rule in Ca. is that noncompetes are unenforceable. State law has narrowly drawn exceptions for noncompetes made pursuant to a sale of a business, sale of a shareholder's stock, or dissolution of a partnership. Otherwise, agreements that limit an employee's ability to obtain work will be enforced only when the employer can show a strong interest that needs to be protected. Ca. courts generally don't give force to geographical & temporal restrictions, but the courts have consistently upheld an employee's convenant not to solicit the former employer's customers for terms from one to five years after employment ends.

                I believe I would have the agreement reviewed by an attorney but it's up to you.
                Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

                Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

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                • #9
                  Betty- What exactly are seeing that is enforceable?

                  CA courts NEVER enforce non-competes against non-owner employees. They can't by statute, no matter how badly the employer's interest needs to be protected. The only thing having the effect of a non-compete you might see is an injunction against employee who has missapropriated and is using trade secrets from his ex-employer for his new employer, but that is a function of a non-disclosure agreement, NOT a non-compete covenent.

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                  • #10
                    Agreed with TheRed on this point. I did some research on this yesterday and everything I can find indicates that NCAs for employees in CA have no legal support what-so-ever. There was a 2006 case that tried a very narrowly worded restriction struck down the NCA (Edwards v. Arthur Andersen LLP, No. B178246 (Cal.App. 2 Dist./Div. 3) (8/30/06).). The several articles I read on this since that case do not see any legal possibility for any employee related NCA in CA.

                    -----

                    Just a thought, but the NCA being dead is a door that swings both ways. A court action brought by the OP's employer claiming the overpayment was a payment error might well succeed.
                    "Reality is that which, when you stop believing in it, doesn't go away".
                    Philip K. **** (1928-1982)

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                    • #11
                      Originally posted by TheRed View Post
                      Actually, that agreement is totally 100% illegal in California, under CA Business and Professions Code 16600. Additionally, CA courts flat out reject the inevitable disclosure docterine, so the trade secrets exception does not apply. Do a little research guys...


                      Sign the agreement, cash the check, and do whatever the heck you want. Since the contract is void by statute, the company can't recover the money.
                      Thanks for the clarification TheRed. I will sign the agreement.

                      Comment


                      • #12
                        Originally posted by DAW View Post
                        Agreed with TheRed on this point. I did some research on this yesterday and everything I can find indicates that NCAs for employees in CA have no legal support what-so-ever. There was a 2006 case that tried a very narrowly worded restriction struck down the NCA (Edwards v. Arthur Andersen LLP, No. B178246 (Cal.App. 2 Dist./Div. 3) (8/30/06).). The several articles I read on this since that case do not see any legal possibility for any employee related NCA in CA.

                        -----

                        Just a thought, but the NCA being dead is a door that swings both ways. A court action brought by the OP's employer claiming the overpayment was a payment error might well succeed.
                        From my research, it was not so much the documents themselves but the willingness of the CA courts to look for ANY reason to throw an NCA out until they act itself became meaningless.
                        Not everything that makes you mad, sad or uncomfortable is legally actionable.

                        I am not now nor ever was an attorney.

                        Any statements I make are based purely upon my personal experiences and research which may or may not be accurate in a court of law.

                        Comment


                        • #13
                          Originally posted by joec
                          Thats a good thing NCA are a sham in most cases.
                          JoeC
                          Agreed.

                          NCA are mostly smoke and bluff. There is a little meat in the sandwich, but not much.

                          Hmmm... any way I can sneak another clique in here? Nah... better get while the gettin's good.
                          Not everything that makes you mad, sad or uncomfortable is legally actionable.

                          I am not now nor ever was an attorney.

                          Any statements I make are based purely upon my personal experiences and research which may or may not be accurate in a court of law.

                          Comment


                          • #14
                            Originally posted by TheRed View Post
                            Betty- What exactly are seeing that is enforceable?
                            Per my source book (Ca. labor/employment lawyer) non-competes (non-owner employees) have been enforced by some courts when reasonable re restrictions.

                            I would think he would know. That's just what my source says.
                            Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

                            Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

                            Comment


                            • #15
                              Originally posted by cyjeff View Post
                              From my research, it was not so much the documents themselves but the willingness of the CA courts to look for ANY reason to throw an NCA out until they act itself became meaningless.
                              It's not the court's hostility to NCA's, it's that there is a law expressly forbidding non-competes. I'm surprised your research hasn't uncovered it. There ain't no meat on that sandwich. Not even a little. It's a tofu wrap of nothingness.


                              Originally posted by DAW
                              ...Just a thought, but the NCA being dead is a door that swings both ways. A court action brought by the OP's employer claiming the overpayment was a payment error might well succeed.
                              I doubt that the employer would be able to recover the payment for a variety of reasons.

                              - The non-compete would still be valid outside of CA and it's likely that the agreement contains additional covenents that would be valid CA B&P Code ยง16600 notwithstanding, e.g. an ADEA waiver. The company still would have purchased something of value.

                              - The claim that the payment was in error has little merit. There was no material error in fact of the terms of the contract. Rather the contract is void because it has an illegal intent.

                              - In the case of contracts that are void due to illegality, the courts are more likely to leave the parties as they found them, rather then ordering restitution.

                              - Any claim for repayment would more then likely be based on the theory of unjust enrichment. I doubt that claim's success because the contra proferentem rule shifts the risks to the drafter. Additionally, the ex-employer would easily be judged a sophisticated party that should have known what the law of the land has been for at least forty years.

                              Comment

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