Labor and Employment

Employees Employment Contracts and Policies FAQs

Q: Are covenants not to compete always enforceable?

  • A:Covenants not to compete, often simply referred to as "non-competes," can definitely be enforced. However, enforcement can, and often does, depend on a number of factors and can vary based on state law.

    Mutual consideration is necessary to support a contract. A non-compete is a contract. This means that both you and your employer get something, you both benefit and also give up something, when you sign the non-compete. A new employee gets a job with benefits, but must give up the right to compete within a certain area and time frame. The employer gains a new employee and a signed non-competition agreement, but must pay accordingly for this.

    Some companies, when asking employees to sign a non-compete several years after hire, offer a bonus or sum of money for signing these. If your company, through your boss, has not offered to pay you for signing the non-compete, nor required your signature to keep your job or your current pay rate, there is a basic question of whether or not there is sufficient, or any, consideration to support the contract several years after your hire.

Q: Are severance packages taxable?

  • A:Yes. For most people who receive severance payments based solely on a formula dependent on weeks and number of years worked, their severance will be fully taxable as wage income under the Internal Revenue Code. Usually, an employer will go ahead and withhold the appropriate taxes for a severance package. This is certainly an easier approach for the employees, who are already going through a stressful period.

    In limited circumstances, particularly where a severance package is large- say for an executive- money above and beyond the employer's standard severance payment may be considered in lieu of a personal injury tort claim and settlement.

Q: Can my employer prohibit body piercing in the workplace?

  • A:An employer is generally permitted some discretion in dictating a dress code for its employees. A number of business factors can influence that discretion. A company may wish to project a certain image to its customers. Creating an image and displaying a professional mode of dress are both readily acceptable rationales for business dress codes.

    Safety and protection of its workforce should always be a high priority. Your employer's policy may be affected by this consideration, depending on your area of work. This is important. A policy prohibiting body-piercing jewelry may greatly affect safety in one job, but be pretty unlikely to have any safety impact in another.

    If you're a union employee, you'll be governed by your bargaining agreement. In that case, you'll need to review your agreement to determine whether or not such a policy could be interpreted as an unfair labor practice.

Q: If an employee files a claim against an employer, is there any protection from retaliation by the employer?

  • A:Yes. Employees have protections from retaliation on several fronts. Employees who file claims under Title VII, for example, have protections under the federal statute against retaliatory actions, up to and including retaliatory discharge. Many state statutes on discrimination mirror the federal statute.

    In the area of workers compensation involving claims for injury on the job, many state statutes also have provisions against retaliation for filing a workers compensation claim.

    But employees must be reasonable in sizing up their ability to prove a claim of retaliatory discharge. To successfully prove a case of retaliation, the plaintiff must prove a close connection between the protected behavior (for example, filing a workers compensation or discrimination claim) and the alleged retaliatory behavior.

    Poorly performing employees will sometimes file a claim against an employer with the thought that they'll be protected from discharge because they'll allege retaliation. They are sorely mistaken. A frivolous filing will never insulate a claimant from discharge.

Q: My company was sold. Is my non-compete agreement no longer valid?

  • A:Whether or not you must continue to abide by and honor your non-compete agreement depends on many factors. First and foremost are the actual terms of your agreement. Some well-written non-competes may have actual language in them which foresees the possibility of the company being acquired by another.

    Even if the agreement doesn't have specific language, however, it may very well still be enforceable. If the acquiring company will still be engaged in a similar business and still use the prior company's client or customer base and manner of doing business, there is a strong likelihood that the acquiring company can enforce the agreement.

Q: Why am I being required to sign a release to be able to collect a separation payment?

  • A:The actual language of the agreement as well as the specifics of the company and your employment situation (employment at will, union/non-union, contractual, etc.) is important when evaluating a separation and release agreement.

    In general, a release states that you're giving up certain rights, claims or privileges to the company in exchange for receiving something. Here, that "something" appears to be the separation payment. The actual language of the release should be clear and easy for you to read and understand. You must knowingly and voluntarily give up your rights and claims.

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