Are Non-Competes Enforceable in California?

Many people have heard of a non-compete agreement, but may not completely understand what it means. In fact, some people sign non-compete agreements as terms of their employment without even realizing it. A non-compete is a type of legal agreement that forbids an employee from going to work with a competitor of their current employer. These agreements exist to protect company secrets. However, it is important for employees to know whether or not a non-compete is enforceable in California.

How Does a Non-Compete Agreement Work?

A non-compete is something called a “restrictive covenant” that is used to restrict an employee’s behaviors or actions once they are no longer working for a company. Namely, they restrict where and how a former employee will work, effectively keeping them from working for a competitor. Usually, these agreements are in place for only a limited amount of time, not permanently. These agreements will usually be presented at the time a person fills out their initial hire paperwork.

Problems With Non-Compete Agreements

Non-compete agreements are controversial, as they are very restrictive and prevent employees from certain actions if they want to avoid legal trouble. However, these agreements are very difficult to uphold in court because the employer must show that the employee caused damages as a result of breaching the non-compete agreement. An employer would need to prove that the non-compete agreement protects a legitimate business interest, though courts have generally held an unfavorable view of non-compete agreements that infringe on a former employee’s right to earn an income.

What Does California Law Say About Non-Competes?

According to the California Business and Professions Code Section 16600, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

In other words, non-compete agreements are not enforceable in California. However, that does not mean that an employee will not be wrongfully presented with one or told that they have to sign one as a condition to their employment. Employers may try to say that there are extenuating circumstances in place for them to enforce a non-compete agreement, but these arguments are usually rejected by California courts.

As of January 1, 2017, non-compete agreements in California must operate under these rules:

  • Employees can void any non-competes that require a court outside of California to decide disputes. In other words, the company cannot enforce an employee’s non-compete agreement in a state that allows these agreements.
  • Employees are able to void contracts with illegal non-compete terms.
  • Only California courts are able to rule on non-compete issues within the state, and the courts can only do so using California law.
  • Employees are able to receive compensation for their attorney’s fees if they have to go to court to stand up for themselves in a non-compete dispute. Employers cannot seek attorney’s fees from the employee, even if the employer wins.

Do You Need an Attorney for This Case?

If you have any questions or concerns about your non-compete agreement, please speak to a qualified Orange County employment lawyer as soon as possible. The laws surrounding a non-compete can be complicated and difficult to understand, particularly in California. An attorney will help ensure you do everything according to the most up-to-date laws in this state and will ensure that your professional rights are protected.