At Cohen Employment Law, we recognize that understanding, negotiating, and revising employment agreements and severance packages can be a complex and daunting process. The terms in these agreements have significant legal implications—both economic and non-economic—and may affect an employee’s entitlement to pay and equity, ability to work for competitors after termination, ability to work with certain customers or co-workers after termination, ability to pursue litigation against the employer, liability for fees in the event legal action occurs, confidentiality obligations, and more. We are committed to helping our clients not only understand the terms of these agreements, but to learn about what constitutes fair market value and negotiate more favorable terms.
Broadly speaking, an employment agreement is a legally binding contract between an employer and an employee that outlines the terms and conditions of employment. While their contents vary, employment agreements typically cover several key terms:
A severance package is a set of compensation and benefits offered to an employee who is being let go for any number of reasons, including a layoff, reduction in force, position elimination, or termination with or without cause. From an employer’s perspective, the principal benefits of offering a severance package to a departing employee are securing a release of claims and implementing or extending restrictive covenants. By contrast, employees may seek to obtain favorable severance pay and benefits, the vesting of stock options or equity awards, the nullification of restrictive covenants, and more. Common terms often found in severance agreements include the following:
A non-compete agreement is a contract that prohibits an employee from working for a competitor or starting a competing business within a particular timeframe and geographic area during employment or after the termination of an employment relationship. Non-compete agreements are legal in North Carolina and Virginia, but they are strictly construed and must satisfy several requirements to be enforceable, including:
In Virginia, non-competes are unenforceable as to “low wage” employees (those earning less than the average weekly wage in Virginia), the threshold for which is updated annually. As of 2025, employees earning an average of less than $1,463.10 per week, or $76,081 per year, are considered “low wage” employees. For agreements entered into on or after July 1, 2025, non-competes are also unenforceable as to employees who are classified as nonexempt under the FLSA.
A non-solicitation agreement is a contract that prohibits an employee from soliciting an employer’s customers, prospective customers, employees, contractors, vendors, or other individuals or entities with whom the employer does business. Non-solicitation agreements are analyzed in many respects like non-compete agreements, but they are generally subject to less scrutiny. They also typically must be limited to those individuals or entities that the employee had “material contact” with or about whom the employee obtained confidential information.
A confidentiality agreement—also known as a non-disclosure agreement or NDA—is a contract that prohibits an employee from using or disclosing confidential information. What constitutes confidential information varies by employer and industry, but it is typically defined to include valuable or proprietary information that is not generally known and that an employer’s competitors would find useful, or that would otherwise be harmful to the employer, if disclosed. Confidential information may include, among other things, processes, practices, strategies, techniques, research, financial information, marketing information, trade secrets, and more. Confidentiality agreements must be tied to a legitimate business interest to be enforceable. The law also imposes certain exceptions, including limited disclosures of confidential information for whistleblowing purposes.