Non-Competes in California

Generally speaking, employee non-compete agreements are unenforceable in California. But there are several exceptions to this rule; including the seller of a business’s goodwill or a membership interest in an LLC, and where the non-compete is necessary to protect an employer’s trade secret information. In our digital age, it is all too important for a business owner to strategically protect the business’s intellectual property portfolio.

Is your employer’s non-compete valid?

A recent decision from a federal district court in Northern California shows what a fine line it is between valid and invalid non-competes. In this case, a company sought a preliminary injunction against a former employee who had joined a competing company. In addition to alleging a claim for trade secret misappropriation, the company accused theex-employee of breaching his employment agreement which contained a non-compete/non-solicitation provision. The provision at issue was an agreement by the employee that he would not solicit any customer “who purchased or leased products or services from [the Company] at any time during the 12 calendar months immediately preceding the termination of this agreement for any reason and for or with whom employee had contact, responsibility or access to confidential information related to” the customer.

The employee opposed the motion for preliminary injunction by arguing that the “non-compete” provision in his employment agreement was unenforceable under the California Business and Professions Code section 16600, which states that “covenants not to compete are generally unenforceable” in California.

The company argued that the “non-compete” was enforceable because it was limited to only seeking to prevent its former employees “from using [the Company’s] confidential information to solicit customers.” However, the Court found that the subject provision was much broader and rejected the argument, holding that the non-compete agreement was unenforceable under California law. California courts tend to be very strict about enforcing the state’s public policy against non-competes. If an employer seeks to enforce a non-compete agreement against you, make sure that experienced Orange County employment lawyer reviews your document.

For more information on non-compete agreements in California, contact the skilled trade secret lawyers at Hardin & Associates today.