Friday, August 8, 2008

Non-compete agreement? Not in California.

The California Supreme Court has ruled non-compete agreements illegal except in a very few circumstances. The law allows for them explicitly in cases involving the break-up of a corporation or partnership, but beyond those exceptions written into the law the Court ruled that the law simply prohibits an employer from restricting a former employee's right to engage in their profession. The full ruling is here. Given that it's the California Supreme Court ruling on this, Federal courts are likely to follow this ruling when interpreting California employment law. So if you work in California and your company had you sign a non-compete clause, it's out the window now.

Note that this doesn't mean you can do anything you want. If you got training at the company's expense, for instance, the clause that says you must either stay a certain length of time or re-pay the cost of the training (probably pro-rated) is still enforceable. If you do something like take company confidential information (eg. software source code, customer lists, etc.) and give it to your new employer, your former employer has grounds other than non-compete they can sue you on. And if you're a salesman and openly solicit your former company's customers to follow you to your new one, your former company again can sue you for that.

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