Employers often want employees to sign a non-compete agreement, but in California, enforcing these contracts is difficult.
It is common in California for employers to ask their employees to sign non-compete agreements as a condition of their employment. Typically, employees are presented with these contracts at the time of the initial hiring as part of an employment agreement. In California, it is much more difficult to enforce these contracts than in other states.
How Does California Define Non-Compete Agreements?
Non-compete agreements typically include language stating that the employee cannot render services, either directly or indirectly, for a certain amount of time after they have stopped working for the employer. Although many other states in the country will generally uphold non-compete agreements, the same is not true in California. The courts will not generally enforce a non-compete agreement in the state, even when the contract outlines a reasonable amount of time or geographical region.
According to the California Business and Professions Code, Section 16600, any contract that restricts someone from engaging in a legal professional, trade, or business, is considered void. As such, non-compete agreements in California are usually not upheld by the courts. However, there is one exception.
In the case of Dowell v. Boisense Webster, the Court of Appeal of California, Second District ruled that non-compete agreements are enforceable when they are intended to protect trade secrets. Trade secrets include any information that is essential to the operation and profitability of a business. A trade secret may be a formula, recipe, software coding, methods and practices, or any other information that is critical to a business, and that has not been made available to the public.
Anti-raiding is a term that is often confused with non-compete agreements, but the two are different. Like non-compete agreements, anti-raiding language is also usually included within an employment agreement at the time of the initial hire. Anti-raiding provisions within such an agreement prohibit employees from recruiting or soliciting other employees to leave their current employer to work for a direct competitor. While the California courts generally will not uphold non-compete agreements, they have upheld anti-raiding agreements. The enforceability of these agreements depends on:
- Whether the restrictions are reasonable,
- The impact the restrictions will have on the business, and
- The manner in which the business is restricted from competing and the possible pooling of employees
As such, if it is found that the solicitation of employees affects a business’ ability to compete, even slightly, the court will likely uphold the anti-raiding agreement.
Call Our Murrieta Employment Lawyers Today
Non-compete agreements always have the potential to become complicated, but in California they are even more complex. If you have been accused of violating a non-compete agreement, or you need to draft one that protects your business, our Murrieta employment lawyers at Gibbs & Fuerst, LLP can help. We understand the rights of employees and employers, and we will work hard to ensure your rights are upheld.
Serving the San Diego, Temecula, Riverside and San Bernardino areas of Southern California
Call our Murrieta office at 951-816-3435 or our San Diego office at 619-702-3505 for a free consultation. You can also contact us online at any time and a lawyer from our office will call or respond to your e-mail soon.
We can handle non-compete contract matters on an hourly, flat fee, or contingency basis depending on your specific matter. If handled on a contingency basis you pay no legal fees unless we obtain a verdict or settlement on your behalf.