Non-Compete Agreements in California: What You Need to Know

A non-compete agreement is a contract between an employer and employee that limits the employee`s ability to work for a competitor or start a competing business after leaving their current position. In California, non-compete agreements are highly regulated and generally not enforceable.

California has a strong public policy against restraining competition and innovation, which is why non-compete agreements are generally considered invalid. Under California law, non-compete agreements are only enforceable in very limited circumstances. These include:

1. Non-compete agreements as part of a sale of a business

If a business is sold, the new owner may require that the seller sign a non-compete agreement to prevent the seller from using their knowledge of the business to compete against the new owner.

2. Non-compete agreements as part of a partnership agreement

If partners in a business agree not to compete with each other after the partnership is dissolved, a non-compete agreement may be enforceable.

3. Non-compete agreements for certain professions

There are some professions in California where non-compete agreements are enforceable, including physicians, dentists, and psychologists. However, these agreements must be limited in duration, geographic scope, and the type of practice.

If you are subject to a non-compete agreement, it`s important to consult with an experienced attorney who can review the agreement and advise you on your rights. Violating a non-compete agreement could result in a lawsuit and damages for the employer.

It`s also important to note that while non-compete agreements may not be enforceable in California, there are other ways that an employer can protect their business interests. This includes:

1. Confidentiality agreements

An employer can require an employee to sign a confidentiality agreement that prevents them from sharing confidential information with a competitor.

2. Non-solicitation agreements

An employer can require an employee to sign a non-solicitation agreement that prevents them from soliciting the employer`s customers or employees after leaving their current position.

3. Trade secret protection

An employer can take steps to protect their trade secrets, such as requiring employees to sign nondisclosure agreements, limiting access to confidential information, and monitoring employee activity.

In conclusion, non-compete agreements in California are generally unenforceable, except for limited circumstances. If you are subject to a non-compete agreement, it`s important to consult with an experienced attorney who can advise you on your rights. Employers can still protect their business interests through other means, such as confidentiality agreements and trade secret protection.