Non-Compete Agreement in California 2019: Everything You Need to Know
A non-compete agreement, also known as a covenant not to compete or a restrictive covenant, is a legal contract that prohibits an individual from working for a competing business or starting a competing business for a certain period of time after leaving their current employer.
In California, non-compete agreements are generally not enforceable, with some exceptions. This means that employers cannot prevent their employees from working for competitors or starting their own business in most cases.
The California Labor Code Section 16600 establishes that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” This means that any agreement that limits an employee’s ability to work in their chosen profession or industry after leaving their current employer is unenforceable in California.
However, there are a few exceptions to this rule. Non-compete agreements are allowed in California in certain circumstances, such as in the sale of a business or the dissolution of a partnership. Additionally, non-solicitation agreements, which prohibit employees from soliciting clients, customers, or other employees of their former employer, are generally enforceable in California.
It’s important to note that while non-compete agreements may not be legally enforceable in California, employers can still include them in their employment contracts. This means that employees may be subjected to these agreements, even if they are unenforceable.
If you are an employee, it’s important to thoroughly read any contract you are asked to sign before accepting a job offer. If you have concerns about a non-compete agreement or any other clause in your contract, it’s best to speak with an attorney before signing the agreement.
On the other hand, if you are an employer in California, it’s important to ensure that any agreements you include in your employment contracts are legally enforceable. Non-solicitation agreements may be a better alternative to non-compete agreements if you wish to protect your business’s clients and customers.
In conclusion, non-compete agreements are generally unenforceable in California. However, there are exceptions to this rule, and employers may still include them in contracts. Employees should carefully read any contracts they sign, while employers should ensure that any agreements they include in contracts are legally enforceable.