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A non-compete agreement restricts where or how an employee may work after leaving a job, while a non-solicitation agreement limits contact with certain customers or employees. Although the provisions serve different purposes, either can create problems when it interferes with an employee’s ability to continue working. Reach out to our employment attorney in Orange County if you are struggling with employment issues relating to non-compete or non-solicitation agreements.
A non-compete agreement may prohibit a former employee from joining a competitor, starting a competing business, or providing similar services within a particular area or period. These restrictions can prevent someone from using their experience to continue working in the same occupation. California generally does not enforce non-compete provisions in employment agreements, even when the restriction covers a limited geographic area or lasts only a few months.
A limited exception can apply when someone sells a business and its goodwill. In that situation, the buyer may require the seller to refrain from immediately opening a competing business and reclaiming the customers included in the sale. This exception usually does not apply when an employee leaves a job.
A non-solicitation agreement does not always prevent someone from accepting a position with a competitor. Instead, it may prohibit a former employee from contacting the company’s customers, seeking business from certain accounts, recruiting coworkers, or encouraging employees to leave.
California courts consider what the clause prevents the employee from doing. A customer restriction may interfere with a salesperson, consultant, or account manager who relies on professional relationships. An employee restriction may prevent a recruiter from performing the same work for another company.
California’s limits on non-compete and non-solicitation agreements do not permit employees to take or misuse trade secrets. An employer may protect customer information, pricing data, business methods, or other material that has economic value because the company keeps it confidential.
A properly limited confidentiality agreement can restrict the disclosure or use of protected information without preventing lawful employment. The company cannot classify general knowledge, professional experience, or publicly available contacts as confidential to prevent competition.
The timing of the conduct can also matter. An employer may prohibit an employee from diverting business or recruiting coworkers for a competing venture while still employed. After the employment relationship ends, the company must distinguish lawful competition from the misuse of genuinely protected information.
Signing a non-compete or non-solicitation agreement does not automatically make every restriction enforceable. An employment lawyer can help by:
Keep the agreement, offer letter, separation documents, and communications from your former employer. Refrain from taking, deleting, or altering company materials while the dispute is being evaluated.
A restrictive clause can affect a job offer, career move, or plans to start a business even when the employer cannot legally enforce it. Contact Aegis Law Firm online or call (949) 379-6250 for a free consultation to learn how California law applies to your agreement.