The Validity of California Non-Compete Clauses

California employees should familiarize themselves with the state’s strict mandates against non-compete and non-solicitation agreements. Unlike many other states, California Business and Professions Code section 16600 does not permit non-compete clauses, even if they are reasonable in scope and purpose. A non-compete clause or agreement, is also known as a “restrictive covenant.” These agreements dictate and restrict an employee’s actions after they are no longer working for an employer. In most cases, they work to restrict an employee’s ability to work for a competitor.

These clauses are against California employment law, and employers may be liable for wrongful termination if they terminate an employee who refuses to agree to the agreement. Public policy dictates that these agreements are unenforceable because of the fundamental power disparity between employers and employees. However, the bar on non-compete clauses generally only apply after termination, because employees have a common-law duty to their employer, while employed.

Despite these agreements’ illegality, California employers often present these agreements and take advantage of an employee’s lack of legal knowledge. Further, employers often evade liability for wrongful termination by utilizing a choice-of-law provision. This provision is an agreement that if the employer and employee are ever engaged in a dispute, they will use an agreed-upon state’s law to resolve the contention. However, California law prohibits employers from using choice-of-law provisions to get around the non-compete laws.

In sum, employers cannot enforce a restrictive covenant by pointing to the choice-of-law agreement in an employment contract. Further, employees can avoid abiding with an illegal non-compete provision in their contracts. Moreover, California courts maintain jurisdiction to rule on non-compete issues within California and must do so using California law. Finally, employees engaged in court proceedings regarding non-compete disputes are entitled to compensation for attorneys’ fees. It is important to note that even if the employer succeeds, they cannot seek attorneys’ fees from the employee.

Employees should understand that, although non-compete clauses are unenforceable, employers maintain more discretion in enforcing non-solicitation agreements. Unlike non-compete clauses, non-solicitation agreements may be lawful if the agreement is limited in time, scope, and geography. However, courts have trended toward narrowing the scope in favor of California employees. Despite the laws, California employers continue to engage in unlawful employment practices, and it is crucial that employees contact an attorney to discuss their potential recourse.

Is Your California Employer Violating Employment Laws?

If you believe your employer is violating your rights or otherwise engaging in discriminatory or illegal practices, contact The Nourmand Law Firm, APC, for assistance. Our office has been representing California employees for over 20 years. We understand the lifelong impact that discrimination and unlawful employment practices can have on a person’s livelihood and reputation. We work to ensure that our clients receive high-quality and effective representation in their claims against unlawful employers. Our team of experienced California employment lawyers has been highlighted in several publications for their exceptional representation. And, because we only represent employees, you know where our loyalties lie. Contact our office at 800-700-WAGE for a free consultation to discuss your right to recovery.