What is a California Non-compete Agreement?
A California Non-compete Agreement is a legal document that restricts an employee from working for competitors or starting a competing business after leaving their current employer. However, California law generally prohibits these agreements, making them unenforceable in most cases.
Are non-compete agreements enforceable in California?
In California, non-compete agreements are largely unenforceable. The state’s Business and Professions Code Section 16600 states that, with some exceptions, any contract that restrains someone from engaging in a lawful profession, trade, or business is void. This means that employers cannot prevent employees from seeking employment elsewhere.
What are the exceptions to the non-compete rule in California?
While non-compete agreements are mostly unenforceable, there are some exceptions:
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Sale of a business: If a business owner sells their business, they may agree not to compete in the same market for a specified period.
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Partnership agreements: Partners in a business may have restrictions on competition as part of their partnership agreement.
What should I include in a non-compete agreement?
If you are considering a non-compete agreement in California, focus on the following:
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The scope of the agreement: Clearly define what constitutes competition.
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The duration: Specify how long the agreement will be in effect, keeping in mind California's restrictions.
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The geographic area: Limit the area where the employee cannot compete.
Can I still use a non-solicitation agreement?
Yes, non-solicitation agreements are generally enforceable in California. These agreements prevent former employees from soliciting clients or employees of the company after leaving. However, they must be reasonable in scope and duration to be enforceable.
What happens if I violate a non-compete agreement?
If a non-compete agreement is deemed enforceable (which is rare in California), violating it could lead to legal action from the employer. This may include seeking an injunction to prevent further violations or claiming damages for losses incurred due to the violation.
Should I consult a lawyer before signing a non-compete agreement?
Yes, it is advisable to consult with a lawyer before signing any non-compete agreement. A legal professional can help you understand your rights and obligations under California law, ensuring that you make informed decisions regarding your employment and any agreements you enter into.