Does My Severance Agreement Supersede My Non-Compete

Short answer - it might.  But if it does, that means that your employer was probably pretty sloppy.  Most severance agreements contain an “Entire Agreement” clause that reads something like:

This Agreement contains the entire agreement between the Company and you regarding your termination and supersedes and renders null and void any and all prior or contemporaneous oral or written understandings, statements, representations or promises.                 

If you have a non-compete agreement which predates your severance agreement, and the above-language is in your severance agreement then the severance agreement supersedes and renders null and void your prior non-compete.  In other words, by signing the severance, you kill the non-compete (along with any other agreements that were signed before your severance).  We’ve seen it happen, but this would definitely be sloppy work by the company.

The reason this would be sloppy is because it is very easy to carve out an exception for non-compete agreement.  All an employer has to do is revise the above “Entire Agreement” clause so that it states

This Agreement contains the entire agreement between the Company and you regarding your termination and supersedes and renders null and void any and all prior or contemporaneous oral or written understandings, statements, representations or promises, with the exception of any agreements concerning confidentiality, trade secrets, or any nonsolicitation, or noncompetition agreements, all of which agreements shall remain in full force and effect, and are hereby confirmed and ratified.        

This one revision makes a big difference.  Now, the severance agreement is still the final binding agreement between the employee and the employer, but it explicitly carves out the non-compete, etc. so that the employee is still bound by it.

If you have a non-compete agreement or severance agreement, you would be wise to consult with an attorney.  Our attorneys counsel employees with these agreements every day and would be happy to help you.  Contact us today for a consultation.