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.
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.
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.
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:
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.