Employment, Severance & Non-Compete Agreements

What is an employment contract?

An employment contract is a binding agreement between an employer and employee setting forth certain terms of the employment relationship. Employment agreements may be limited or comprehensive. Limited employment agreements are often designed to protect an employer's confidential information against disclosure and may also include non-compete and non-solicitation provisions. Comprehensive employment agreements are often reserved for key executive employees.

In Virginia and the District of Columbia, the employment relationship is "at-will" meaning that either party – the company or the worker – is free to terminate the employment relationship for any reason or no reason at all. An employment agreement that includes a term or duration of employment generally has the effect of modifying the at-will employment relationship such that the employment relationship may be terminated only pursuant to the terms of the employment agreement.

What is a non-disclosure agreement ("NDA")?

A non-disclosure agreement, also known as an NDA or confidentiality agreement, prohibits an employee (or other party entrusted with confidential information) from disclosing certain, specified confidential information.

What is a non-compete agreement?

A non-compete agreement is a contract (or contractual provision) that restricts an employee from competing against the employer during employment and for a period of time after employment ends. Non-compete agreements must be narrowly tailored to meet the company's legitimate business interests without unduly restricting the employee's ability to earn a living. Courts often consider whether the non-compete agreement is reasonable with respect to scope, time, and geographic restrictions.

What is a non-solicitation agreement?

A non-solicitation agreement is a contract (or contractual provision) that restricts an employee from soliciting the company's customers, clients or employees during employment and for a period of time after employment ends. Like non-compete agreement, non-solicitation agreements must be narrowly tailored.

What terms are typically included in an employment separation or severance agreement?

Every Separation Agreement must be tailored to the particular employer and employee, but issues that typically require negotiation include: (1) employee compensation and benefits upon termination; (2) release of liability for claims; (3) references and other matters important to the employee's interest in securing future employment; (4) non-compete, non-disclosure agreements and other restrictive covenants important to the employer's interest in protecting business secrets; and 5) confidentiality of the Separation Agreement.

What are employment "release" agreements, and are releases enforceable?

In the context of employment law, a "release" is an agreement between the employer and employee under which either or both waive the right to sue the other on certain potential claims. Separation agreements that include severance pay or other valuable consideration to the employee often include broad releases in which the employee generally waives the right to sue the employer for employment discrimination or any other claims that may have arisen during the course of employment. Several employment-law statutes govern the terms, conditions and legal scope of employee releases.

Are employers in the District of Columbia or Virginia required to offer severance pay to employees?

There is no law in the District of Columbia or Virginia requiring a private company to pay severance to employees who are fired. laid-off or otherwise leave the job. Severance pay may, however, be required for executives or other workers under employment agreements. In addition, public employees may be entitled to receive severance payments under D.C. laws.

How much severance pay is typically offered to an executive or other employee?

Severance pay packages for private employees vary widely. Factors that determine the appropriate level of severance include industry standards, the company's ability to pay severance, the potential for offering other benefits to offset severance pay, and the relative strength of the parties' bargaining positions (i.e., whether the employee has a potentially valid claim that is being released).

If you need an experienced lawyer to draft, review, negotiate, or enforce an employment contract, severance agreement, non-compete, non-disclosure or other employment agreement, call attorney Lori Searcy today at 703-644-4122 / 202-393-1443 or complete the employment case review form. For more information about severance and separation agreements visit: The Employment Law Chronicle.