Garden leave is a provision where your employer continues to pay you during your non-compete restriction period in exchange for keeping you out of the job market. Originally common in the UK and Europe, garden leave provisions are increasingly appearing in US non-compete agreements — particularly in states that require consideration beyond continued employment to enforce non-competes. The concept sounds fair: if your employer wants to restrict your ability to work, they should compensate you for it. But the details matter enormously. How much are you paid during garden leave? Is it full salary or a fraction? Does it count as employment for benefits purposes? Can the employer waive the non-compete (and stop paying) at any time? These provisions can be genuinely protective or illusory depending on how they're structured.
What is a Garden Leave Provision?
Garden leave (also called gardening leave) is a contractual arrangement where an employee who has resigned or been given notice remains on the employer's payroll but is not required to attend work or perform duties. During this period, the employee is typically bound by all contractual obligations including non-compete and confidentiality restrictions. In the US context, garden leave is increasingly used as the 'consideration' that makes a non-compete enforceable, particularly in states like Massachusetts, Illinois, and Washington that have enacted legislation requiring adequate consideration for non-competes.
Red flags to watch for
Several states with non-compete legislation (Massachusetts, Illinois, Washington, Oregon) require garden leave pay at 50% or more of the employee's base salary. Pay below this threshold may render the non-compete unenforceable.
This gives the employer an option, not an obligation. They can enforce the non-compete when it suits them and cancel garden leave when it doesn't, leaving you with no pay and potentially still restricted if the waiver terms are ambiguous.
If you receive garden leave pay for 3 months but the non-compete runs for 12 months, you have 9 months of restriction with no compensation. The pay period should match the restriction period.
Loss of health insurance during garden leave can be financially devastating. The provision should clarify that all benefits continue through the garden leave period.
Some provisions reduce garden leave pay dollar-for-dollar by any income you earn from non-competing work, creating a disincentive to find any employment during the restriction period.
Your legal rights
Garden leave in the US is governed primarily by state law, with increasing legislative activity. Massachusetts (M.G.L. c.149, §24L, effective 2018) requires garden leave pay of at least 50% of the employee's highest base salary within the preceding 2 years or 'other mutually-agreed upon consideration.' Illinois (820 ILCS 90, amended 2022) requires 'adequate consideration' which can include garden leave pay. Washington (RCW 49.62, effective 2020) requires garden leave pay for non-competes exceeding 18 months. Oregon (ORS 653.295) limits non-competes to 12 months and requires the employee earn above a specified income threshold. Colorado (C.R.S. § 8-2-113, amended 2022) significantly restricts non-competes and may consider garden leave as relevant consideration. The FTC's proposed nationwide ban on non-competes (2024) remains subject to legal challenge but signals federal direction. Courts generally view garden leave favorably as evidence that the non-compete is reasonable and supported by consideration.
Questions to ask before you sign
- 1What percentage of my base salary will I receive during the garden leave period, and does it meet my state's statutory minimum?
- 2Does the garden leave period match the full duration of the non-compete restriction?
- 3Do my benefits (health insurance, retirement, equity vesting) continue during garden leave?
- 4Can the employer unilaterally waive the non-compete and stop garden leave payments?
- 5Is garden leave pay offset by income I earn from non-competing employment during the restriction period?
- 6What triggers the garden leave — my resignation, termination without cause, termination for cause, or all of the above?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.