What to Know About Employee Non-Compete Agreements in California

Non-compete contracts that restrain an employee/former employee from engaging in a lawful profession, business, or business of any kind are void in California. Here’s everything you need to know about employee non-compete agreements in California.

California does not enforce non-compete agreements, per Business and Professions Code 16600. Such agreements, also known as restrictive covenants, determine and restrict an employee’s actions after they leave their employer, and therefore can have a negative impact on their future career endeavors. Essentially, these kinds of agreements, or clauses, can prevent a former employee from working for a competitor. In short, this is not a legal practice in California.

Unpacking the Implications of Non-Compete Agreements

California ultimately deems non-compete agreements as unenforceable because there can be a power imbalance between employers and employees. An employee’s refusal to agree to a clause that prevents them from working for a competitor may leave the employer liable for wrongful termination if they lose their job for this reason. Wrongful termination occurs when an employer fires an employee without an appropriate or legal reason. These implications, however, only apply after an employee has left their organization since an employer owes common duties to their employees under the law while they are employed.

Unfortunately, some employers can initiate a non-compete agreement anyway if their employee is not aware that these kinds of contracts are illegal in California. Employers may try to avoid liability for wrongful termination by employing choice-of-law provisions, meaning that they can use a different state’s laws as a loophole, but California law prohibits this practice. California courts have the authority to rule on non-compete issues and are entitled to compensation for attorney fees in these cases.

Related: Implied Employment Contracts & Wrongful Termination in California

Tips for Employees

While non-compete agreements are illegal and unenforceable in California, employees should make note that employers may use more discretion when enforcing non-solicitation agreements, which can be legal if the contract is limited in time, scope, and geography. However, California courts have recently narrowed their own scope for these agreements to benefit employees. If an employee notices that their employer is exhibiting any of these aforementioned behaviors, despite the laws in place that prevent them from doing so, the employee is responsible for contacting an attorney to help them resolve the situation.

Related: Are Verbal Work Agreements Binding in California

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If you or a loved one would like to know more about employee non-compete agreements in California, get your free consultation with one of our California Employment Attorneys today!