Upon being laid off, can a company withhold severance and vacation pay if you refuse to sign a non-compete agreement introduced at the last minute?

I was laid off due to a plant closure with a written agreement to receive severance. I also am owed vacation hours. The company will not pay me because they presented a non-compete for one-year agreement at the last minute of my last day that I could not sign. The severance was only 2 weeks and I need to find a job potentially with a competitor. I am one person, they are a large company and have an attorney on staff so they are bullying me because they know based on whats owed to me I can’t really afford to hire an attorney. I have been unemployed for 6 weeks and the severance/vacation time money due to me is overdue by 4 weeks. They will not pay me unless I sign, and whether it will hold up in court later, I don’t want the stigma of having an active non-compete agreement as I interview with new companies. Also ,to note is that, although the company did not pay me my severance as was promised in the letter, they reported it to the state DLT so I did not receive unemployment those weeks. I have wasted a lot of time and am frustrated. It seems like their

actions are way out of line but I dont know what I can do?

Asked on June 1, 2016 under Employment Labor Law, Rhode Island


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Severance is never required, unless you had an employment contract guarantying you it. Otherwise, severance is voluntary on the part of an employer--they can choose whether or not to offer it. Since it is voluntary for them, they can choose what conditions to put it, on such as a non-competition agreement. Therefore, it is legal for your employer to not pay you severance unless you sign a non-competitiong agreement.
If you do not sign and therefore do not get severance, you can appeal the denial of unemployment on the basis that you did not get severance.

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