Since the late 1800s, California has held that an agreement that restricts an individual’s right to practice their chosen profession is invalid. Business and Professions Code Section 16600 states: “. . . every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void.” Over the last hundred years, the Courts have reiterated the strong public policy in favor of open competition and employee mobility.
Despite these laws, many employers still included “non-compete” language in their employment agreements and attempted to keep departing employees from competing. The employers typically relied on a few cases that held that a non-competition clause was acceptable as long as it was narrowly drawn and did not completely restrict the employee from pursuing her chosen profession.
But the California Supreme Court closed the door for good on the “narrow-restraint” exception and stated unequivocally that non-competition agreements for employees are invalid. (Edwards v. Anderson, (2008) 44 Cal.4th 937.)
What does this mean for the average employer? It is possible that your current employment agreements, confidentiality agreements, or separation agreements need to be tweaked to ensure they are accurate and enforceable. Contact our office or any other competent employment attorney to help you navigate the constantly changing field of employment law.
As is usual in the law, there are exceptions to every rule! Non-competition agreements are still valid in the sale or dissolution of businesses such as corporations, partnerships and limited liability companies.
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