California`s treatment of non-compete clauses In general, non-compete obligations are not enforceable in California, and if an employee refuses to sign a non-compete clause, the employer cannot fire the employee. Some employers have tried to circumvent the law by entering into “non-solicitation agreements” that prohibit former employees from recruiting the company`s current employees. However, recent cases in California have revealed that even these narrower provisions are unenforceable. [See AMN Healthcare, Inc.c. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923.] Such restrictions of competition are usually allowed by California courts in valid purchase and sale agreements, which is a great way to retain good employees. The employee is encouraged by the ownership of a part of the company, the company is protected against the fact that this employee starts his competing business or even works for a competitor by the obligation of valid non-competition, as long as the clause is appropriate in its scope. Workers need to understand that while non-compete obligations are not enforceable, employers retain more flexibility to enforce non-solicitation prohibitions. Unlike non-compete obligations, solicitation prohibitions may be legal if the agreement is limited in time, scope and geography. However, the courts tend to narrow the reach in favor of California workers.

Despite the laws, California employers continue to engage in illegal employment practices, and it is important that employees contact an attorney to discuss their possible remedy. If you have been charged with misappropriation of trade secrets or have been forced to sign a non-compete agreement with a trade secret clause, our trade secret attorneys in Los Angeles will defend your rights under California labor laws. For the same reasons that it prohibits non-compete obligations, California law generally prohibits the application of non-solicitations against former employees, as these agreements tend to prevent individuals from exercising their profession or profession. However, California courts may enforce a non-solicitation agreement against a former employee if its primary purpose is to protect the employer`s trade secrets or confidential business information (see below). Like a non-competition clause, non-solicitation clauses are contracts between an employer and an employee in which the employee agrees not to recruit clients or clients of the employer after being dismissed or dismissed from their current position. California courts have generally viewed non-solicitation agreements “as veiled non-compete obligations” and have therefore refused to enforce these agreements with exceptions. Non-compete obligations are common among employers across the country. In the United States, about 20 percent of workers are currently “bound by non-compete obligations, including 14 percent of those earning less than $40,000 a year.” Despite the fact that California does not enforce non-compete obligations, many employers still try to include them in employment contracts without much traction. While some employers try to claim that mitigating circumstances justify the application of non-competition in California, these arguments are regularly rejected by California courts. This has led some employers to try to circumvent California law by stipulating that the agreement is subject to a law in a state where non-compete obligations are regularly maintained.

However, for agreements entered into after January 1, 2017, California Labor Code 925 provides that an employer may not require an employee (who is not represented by an attorney) who works and resides primarily in California as a condition of employment to accept a provision requiring the employee to resolve disputes that arise in California in a forum outside of California or under California law other than the California law. to be decided. If you have any questions about restrictive agreements or non-compete obligations, particularly under California law, you should discuss your concerns with a California employee rights attorney or a California non-compete law. An older and successful businessman known to this author was a big supporter of the California regime, which allows the protection of confidential information, but not non-compete obligations. “It keeps me on my toes to know that there is competition and that if one of my former employees can do a better job than me, so much the better for him. I just don`t want him to steal my secrets… This exemption from California`s non-compete clause restrictions has led many employers and companies to try to create “golden chains” to retain important employees. A small percentage of the company`s ownership is sold or subscribed to the employee and a purchase and sale contract is signed that combines the sale of the property when the employee leaves the company, with a non-compete clause that protects the company. If you have any questions or concerns regarding your non-compete obligation, please contact a qualified labor attorney in Orange County as soon as possible.

The laws surrounding a non-compete clause can be complicated and difficult to understand, especially in California. An attorney will help you ensure that you do everything in accordance with the most recent laws of that state and ensure that your professional rights are protected. From 1. January 2017, California`s non-compete rules must operate according to these rules: It is illegal for California employers to fire employees who refuse to sign non-compete clauses. .