A lot is riding on your noncompete agreement. This website can help guide you through this situation.
The NonCompete Help website is currently limited to California residents or anyone thinking of moving to the Golden State to avoid their noncompete.
We understand this is likely a very stressful time for you, and this will help you sleep better at night.
No one we are aware of has more expertise with California noncompete issues.
What is a Noncompete?A noncompete is any contractual restriction or penalty on your ability to work where you want.
Common examples of noncompete terms include:
- Not being able to work from a competitor.
Related: California Noncompete Case Compendium
Are noncompete terms legal in California?It depends.
For employees all noncompete restrictions are illegal. Unlike other states where the reasonableness of a term may be evaluated to determine if it is enforceable or not, California takes tbe position all noncompete terms are illegal for employees, even if well intended.
For someone selling their business certain limitations on their ability to compete against the buyer paying them money are enforceable. The goal is to protect the value of the business being purchased.
Related: Will a court blue line a noncompete contract?
Does this mean a former employee can take customer lists?No.
The right to work does not mean there is a right to steal.
Customer lists are company property and often involve confidential information and trade secrets.
If an employee leaves Job A to work at Job B, they can do so. But they cannot take Job A's confidential information to Job B and use it.
A rule of thumb is that a noncompete cannot be used to disadvantage an employee who wants to work at Job B merely because they had Job A. But the flip side is the employee cannot gain an unfair advantage at Job B because they had Job A.
I have a number of strategies to help guide you safely through this situation.
What if a contract says a noncompete is enforceable?It does not matter. This is a situation where California law supersedes the contract.
The law says these terms, even if in a written contract, cannot be enforced.
Do I have to give any money back?What if I was paid $1000 to sign a noncompete or promised higher wages? Do I have to give the money back if the noncompete is invalid?
What if the contract refers to the law of another state?It does not matter. California courts will apply California law to the situation.
If you are working in California numerous California laws protect you, such as overtime rules, minimum wage requirements, workers compensation policies, etc.
A company cannot "opt out" of California law by making employees sign a contract referring to laws used in another state.
However, this issue can get complex fast and there are other risks involved. This is the type of issue where you will want an attorney to review the exact language used in the contract.
Certain words, or not including certain words, can have a significant impact on the risks and potential costs involved if a lawsuit is filed.
These types can create a big headache and expense for you so you will want to have your contract terms reviewed so options can be understood.
If you get sued in a state other than California do not ignore the situation thinking nothing can happen to you since employment noncompetes are void in California. A lot can happen, different noncompete terms pose different risks, and there may be financial penalties you have not considered that are separate from whether some judge 3000 miles away does not think you should be working.
Can I move to California to escape my noncompete?Probably.
There can be various strategies used to help reduce the possibility of a lawsuit. The actual terms of your noncompete, the nature of your work, and where you are meeting with customers are some of the issues that need to be reviewed before your risks and opportunities can be evaluated.
My employment agency says I cannot move to another agency.Staffing agencies are notorious violators of California law, sometimes using intimidation and blatantly illegal contracts to force employees to stay with them.
Do not rely on anything an agency tells you, especially if the result is the temp agency puts money in its pocket.
Most likely, claims that your job is confidential and you cannot work at your job through another agency, or directly with the customer, are simply not true.
Unfortunately, the practical reality is some agencies will use any means possible to intimidate employees until an attorney gets involved.
Do noncompete laws apply to contractors?Yes. If you area 1099 independent contractor instead of a W2 employee, the noncompete laws still apply to you.
The noncompete laws in California (Business and Professions Code Sections 16600 et seq.) do not use the term "noncompete" or "employee."
Instead, the laws refer to restraints on a trade, profession or business "of any kind."
The employment situation is the most common time when these issues arise, but noncompete rules are not limited to employees.
If a business tries to apply a noncompete to an independent contractor, one of the first questions will be whether the company is misclassifying an employee as a contractor to avoid paying taxes.
By definition, if one is an independent contractor that means another company has little to no control over their activities.
What about company executives and officers?The noncompete laws apply to them too - even the CEO.
Some states have a rule that if someone within the company, like a CEO, would inevitably company secrets if they went to work for a competitor that this can be stopped.
But not in California.
The courts in California have completely rejected this theory to prevent someone from taking a new job. But, if the person then does in fact disclose secrets to their new company they could be liable.
Can my new company fire me for having a prior noncompete?No.
If you signed an unenforceable noncompete at Job A and move to Job B, you cannot be lawfully fired from Job B as that would indirectly be enforcing the illegal noncompete.
California courts have said this constitutes wrongful termination, a very serious offense for a business.
This is not an issue the Labor Commissioner can help you with.
If you have been fired because of a noncompete with another company you should immediately contact an attorney.
Random Questions to our SiteQ: Does 16600 apply to companies?
Q: Are California contracts valid if signed in pencil?
A: Yes. (Caveat: there may be some special rules for financial or perhaps real estate documents I have no experience with. The general rule is anything goes for a signature: pen, pencil, crayon, paint, blood, etc.)
Q: Can a noncompete include leads?
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Site originally prepared by Brian Kindsvater and information may not be current
Office of Brian Kindsvater
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No attorney-client relationship is created by your using www.noncompetehelp.com. Information presented here is necessarily general in nature and your particular factual situation and issues may involve analysis not presented here. This site does not constitute legal advice.