-
Welcome to our legal community! Click here or the create new topic button to ask a question and receive answers and comments from our friendly and helpful legal community.
Articles that answer frequent legal questions are in our Law Guide. Important legal news is reported in The Law JournalYou can find a lawyer near you in the Lawyer Directory. If you know that you need to hire an attorney, you can submit a case review from a lawyer.
Are noncompete contacts legal
- Thread Starter Mentalism
- Start date
- Status
Betty3
Well-Known Member
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.
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.
- Status
Share this page
