Are non-compete agreements enforceable in California?
In California, many companies require employees to sign non-compete agreements or customer non-solicitation employment contracts as a condition of their employment. Often times an employee of company "X" will resign and gain employment with company "Y" — a direct competitor of company "X". In other situations, an employee of company "X" will start his or her own business and solicit current or former customers of company "X". In these situations, employers will seek court assistance in an effort to compel their former employees to honor non-compete and customer non-solicitation agreements.
At the law office of Fisher & Talwar, we have extensive experience in representing employers and employees in non-compete contract disputes. We offer a position of strength from our experience in handling both sides of highly complicated employment disputes. Our law firm's Los Angeles non-compete agreement lawyers will take every measure possible to protect your interests. Contact our law firm today to schedule a free initial consultation at our Los Angeles law firm.
Defining Non-compete Agreements in California
Non-compete agreements generally contain language saying the employee will not render services, directly or indirectly, for a period of one year after separation of employment with a competitor of a former employer.
Unlike many other states, in California these types of non-compete or anti-solicitation agreements are generally void and not enforceable. This is true even if the non-compete agreement is narrowly tailored, i.e., limited in geographic location and time. This is because California Business and Professions Code §16600 states: "Except as provided in this Chapter, every contract by which anyone is restrained from engaging in lawful profession, trade, or business of any kind is to that extent void."
Until recently, California courts unanimously used the so called trade secret exemption to enforce these non-complete/non-solicitation agreements. Specifically, courts routinely held that a non-compete agreement was valid and enforceable if it was necessary to protect trade secrets of the former employer.
In the recent case of Dowell v. Biosense Webster, Inc., California Court of Appeal questioned whether or not there was a common law trade secret exception to Business and Professions Code Section 16600. Following in the footsteps of Edwards v. Arthur Andersen LLP and The Retirement Group v. Galante, the Dowell court concluded that Section 16600 "prohibits employee non-competition agreements unless the agreement falls within a statutory exception."
The Dowell court further noted: "Section 16600 bars a court from specifically enforcing (by way of injunctive relief) a contractual clause purporting to ban a former employee from soliciting former customers to transfer their business away from the former employer to the employee's new business, but a court may enjoin tortuous conduct (as violative of either the Uniform Trade Secret Act and/or the unfair competition law) by banning the former employee from using trade secret information."
Hence, according to the Dowell court, claims of misappropriation of trade secrets are actionable and the "conduct is enjoinable not because it falls within a judicially created 'exception' to section 16600's ban on contractual non-solicitation clauses, but is instead enjoinable because it is wrongful independent of any contractual undertaking."
California Non-compete Contract Dispute Lawyers
If you are involved in a trade secrets misappropriation claim it is vital to have the experienced California employment contract attorneys of Fisher & Talwar on your side. At Fisher & Talwar, we are highly skilled in litigating misappropriation of trade secret claims.
Contact our law firm online or call 213-891-0777 to schedule a free initial consultation. We are available to meet with you between 8:30 a.m. and 6:00 p.m., Monday through Friday. Evening and weekend consultations are available by appointment.
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Fisher & Talwar
Professional Law Corporation
801 S. Grand Avenue, 11th Floor
Los Angeles, CA 90017-4613
Telephone: (213) 891-0777
Fax: (213) 891-0775
