Logistics operations coordinator blindsided by layoff in 5-minute Zoom call along with 15% of the company—then the employer demanded they sign a non-compete to get severance pay, along with this veiled threat

An employee shared this story with a popular social media workplace discussion community, appealing to readers for advice on the issue. 

In their account of events, they tell how they had been working as a logistics operations coordinator in New York. They claim they were laid off alongside approximately 15% of their coworkers during a five-minute Zoom call and were offered 10 weeks of severance in exchange for a release of claims. 

However, the separation packet also contained a new non-compete that applied retroactively. If signed, it would bar them from working anywhere in logistics, not just in New York but anywhere in the United States for two years. According to the employee, Human Resources further threatened that anyone who refused to sign the separation documents by Friday, with the non-compete in place, would be registered as having resigned “without good cause.” This further put pressure on already desperate, now out-of-work staff.

The employee shared their account of events to this subreddit, appealing to readers for their experience and advice, and starting discussion on the issues of layoffs and aggressive non-competes.

Laid off yesterday. HR is withholding my severance unless I sign a retroactive 2-year non-compete that would ban me from working in my field. 

Is this legal? 

Location: New York. 

Yesterday morning our company did a sudden round of layoffs hitting about 15% of staff over a five minute group Zoom call. I have been working here as a logistics operations coordinator for a little over three years. During the termination call, HR told us that in exchange for our standard release of claims, we would receive 10 weeks of severance pay based on our tenure. My original employment contract from 2021 had a standard NDA and non-solicitation clause, but absolutely zero non-compete language in it.

This morning I finally received the DocuSign separation packet, and buried deep in section 8 is an aggressive, broad non-compete. It claims to apply retroactively and prohibits me from working for any company in the logistics or supply chain sector across the entire United States for two full years. On top of that, the cover email from HR stated that signing this exact document is strictly required to release the severance funds, and that if anyone refuses to sign by Friday 5 PM, they will record the separation as "resignation without good cause" which they specifically noted would disqualify me from NY state unemployment benefits. My field is niche and signing this would literally prevent me from getting hired anywhere I have experience.

I politely emailed HR asking to redline or strike the non-compete clause since it was never part of my initial agreement, and the HR director replied within minutes saying it is "non-negotiable company policy" and that I have until Friday to accept or forfeit the severance completely. I am in a tough spot because I desperately need that severance to cover my bills while job hunting, but signing away two years of my career seems insane. Can an employer actually hold severance hostage over a brand-new non-compete in NY, and can they really block my unemployment if I refuse to sign?

My Experience

I have heard of such unjustifiably overreaching non-competes before. 

I have a friend who, early in her career, when we were first graduating from university, worked for a local cafe. Not a major chain or industry giant, just a local owner who had a few locally owned trendy cafes, each with its own appeal and trade dress so that they were distinct from one another, and so that their relationship and the fact that they weren't a “stand-alone” one-off place was concealed from their “hipster” clientele. Clientele would have cared considerably about that fact.

But, as some business owners are wont to do, these “chill” and trendy cafes employed some aggressive business practices. One was non-competes. Another was Non-Disclosure Agreements (NDA). Everyone from baristas to managers had to sign one.

Why in the heck would you need a non-compete or an NDA to run a cafe? You're probably wondering. What about a cafe could possibly need these?

I really hope that you can tell me and finally answer that question, because as far as I can tell, there wasn't a good reason. Their argument was that it was for their “trade secrets,” which included the store operations procedures, which were the same as any other cafe, and their barista training and “know-how."

Now, I don't know if you've ever made yourself an espresso coffee, but you don't have to know really anything about barista beverages to know that making each drink in a predetermined way, a way that his existed as common knowledge since espresso became a thing, is kind of the entire point of a barista. Like, there are no secrets to hide because the entire point is you're doing it exactly the same thing, in exactly the same way that it always has been.

Now, like anything in this discussion, this isn't advice, just food for thought. But the only thing I can think of here is that forcing staff to sign these documents was a threat of sorts. An intimidation tactic to keep young staff from going on to open their own place, maybe even taking customers with them. 

I'm not sure that any of those documents would have really held up if tested in a courtroom. But they didn't need to. The very idea of costly legal action, which anyone working there wouldn't be able to afford, was enough. 

I have to imagine that that is exactly what is happening here in this employee's account of events. The employer is just banking on the employee's financial insecurity and need for the severance payment and unemployment benefits as a means for the employer to maintain control even after the relationship has ended and laid-off staff have moved on.