Covenants not to compete, or non-compete clauses, are often included in employment contracts. Non-compete clauses can be used to keep employees from working with the company’s competition upon leaving the company. Former employees may also be prohibited from informing the competition about the following:
In most states, non-compete covenants are enforceable if they are reasonable in purpose and scope. “Reasonable” is determined differently by the jurisdiction and the industry. A general rule is that non-competes are likely valid if:
However, under California law, non-compete clauses are generally void. Employment contracts may not be used to restrict an employee’s ability to work in an industry. Also, employers cannot fire an employee for refusing to sign an employee contract with an unenforceable non-compete clause. In that case, the employer may be liable for wrongful termination.
California still allows covenants not to compete, but only in limited circumstances:
Non-disclosure clauses prevent employees from disclosing confidential business information. They are different from non-compete clauses in that they do not prevent employees from working for competitors. However, if the non-disclosure clause too closely resembles a non-compete clause or if it is overly broad, the court may still strike it down.
An attorney may be vital in navigating California’s ban on anti-compete and non-solicitation clauses. California Employment lawyers can help review employment contracts to evaluate non-compete and non-disclosure clauses. An attorney may even be able to suggest alternatives to non-compete and non-disclosure agreements. On the other hand, if you have been terminated for refusing to sign a non-compete clause, speak to a skilled employment lawyer to see if any legal remedies are available to you.
Last Modified: 05-18-2018 02:06 AM PDTLaw Library Disclaimer
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