Non-Compete Agreements

Under California law, non-compete agreements are generally not enforceable. In fact, California law generally disfavors any contractual term that limits an employee’s ability to work for a competitor after they leave a company. However, this fact does not stop employers from trying to find ways of restricting employee’s freedoms once they leave the company. The Nourmand Law Firm, APC is a comprehensive Los Angeles employment law firm that aggressively stands up for workers’ rights. And because we only represent employees, you will never doubt where our loyalties lie.

A non-compete agreement, also referred to as a non-compete clause or covenant not to compete, refers to a contractual term that limits an employee’s ability to work in a certain position or trade that is in competition with the current employer.

As a general rule, non-compete agreements are not permitted under California law. Under California Business and Professions Code § 16600, unless an exception applies, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

There are three exceptions to the general rule against non-compete clauses in California:

1. A non-compete clause can be enforced against an owner of a business who sells its good will interest;
2. A non-compete clause can be enforced against a partner, upon the dissolution of the partnership or their disassociation from the partnership; and
3. A non-compete clause can be enforced against a member of an LLC, upon the dissolution of the LLC or the termination of their interest.

However, even under these limited exceptions, a non-compete agreement must be reasonably limited in scope, both in terms of the geographical area and time period.

Non-solicitation agreements are similar to non-compete clauses in that they restrict an employee from contacting a company’s customers or clients after the employee leaves the company. Some California employers have attempted to skirt the prohibition against non-compete clauses by relying instead on non-solicitation clauses. However, a series of judicial opinions in 2018 and 2019 cast doubt on the continued enforcement of non-solicitation clauses.

The only post-employment agreement that California courts tend to enforce against employees are those that protect an employer’s trade secrets. A trade secret is information that “derives independent economic value … from not being generally known to the public” and “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Thus, employers often try to restrict an employee’s ability to siphon off their customers by relying on broadly-worded agreements purporting to protect an employer’s trade secrets. However, to the extent that these agreements more resemble a non-compete or non-solicitation agreement, California courts will be skeptical.

The bottom line is that California courts are very hesitant to enforce any agreement that limits a worker’s ability to earn an income after they leave a place of employment.

If you were asked to sign a non-compete agreement and have questions about its validity, or your former employer is attempting to enforce a non-compete or non-solicitation agreement against you, The Nourmand Law Firm, APC can help. At our Southern California employment law firm, we have more than 20 years of experience aggressively advocating on behalf of workers—and only workers. We never represent the interests of employers. We also offer all prospective clients a free consultation during which we will answer your questions in clear, understandable terms. To learn more, and to schedule a free consultation with a Los Angeles employment lawyer today, call 800-700-WAGE (9243). You can also connect with our attorneys through our online contact form. We represent clients in Los Angeles, Orange County, Alameda County, Sacramento County and throughout Central and Southern California.