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Are noncompete contacts legal

Discussion in 'Employment Contracts & Work Policies' started by Mentalism, Jan 28, 2013.

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  1. Mentalism

    Mentalism Law Topic Starter New Member

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    I heard that contracts not to compete are illegal. Maybe it is in some places but not others. I live in the new york city area but am considering a job in California and moving there. I don't want to worry about finding work if things don't work out.
     
  2. Betty3

    Betty3 Super Moderator

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    In NY noncompetes are disfavored as a matter of public policy & are enforceable only to the extent that they satisfy the overriding requirement of reasonableness as determined by the courts.

    California - In Edwards v. Arthur Andersen, the California Supreme Court ruled on August 7, 2008 that California employers cannot enforce agreements limiting competition by former employees, except within very narrow statutory exceptions. The Court established this bright-line rule by interpreting broadly California Business and Professions Code section 16600, which prohibits contracts by which anyone is “restrained” from engaging in a lawful profession, trade or business. The Court held that Section 16600 prohibits not only broad post-employment noncompetes, but also “narrow restraints” on competition, such as agreements not to solicit clients of a former employer.


    Edwards draws a clear line and resolves a conflict between California and federal law. It advances California’s policy favoring open competition and employee mobility, and reinforces California’s longstanding position as the state that takes the narrowest view of the enforceability of employee non-competes.

    Following Edwards, employers should review all existing agreements and templates containing any restrictions on post-employment competition. Such agreements will not be enforceable in California unless they fall under one of the established statutory exceptions for noncompetes entered into: (1) in connection with the sale of a business, (2) among partners in a partnership, or (3) among members of a limited liability corporation. In addition, proprietary information agreements (prohibiting use or disclosure of confidential information and trade secrets) and agreements not to solicit employees of a former employer, remain enforceable in California and continue to be effective tools to limit unfair competition by former employees.

    Before ever signing a noncompete, you need to take it to a local employment or contract attorney for review & advice. That's very important.
     

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