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04/14/2015 // href=’http://kellergrover.com’ rel=’nofollow’>Keller Grover LLP // (press release)

Court have made it clear that California’s laws prohibit non-compete agreement in almost all circumstances. In many other states, these agreements can prohibit ex-employees from working for, or starting, another competing company for a period of time over a specific geographic area.

California Business and Professions Code section 16600 states that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” State courts, />
/>· Interpret the statute broadly and don’t enforce covenants not to compete except for narrow circumstances as defined by statute. />
/>· Consider non-compete agreements to violate California’s public policy that promotes freedom of competition and an employee’s right to move between jobs. />
/>· Will strike down such an agreement even when a contract designates the law of another state or country as the applicable law, unless the agreement falls within an exception or the other jurisdiction’s interest is more significant than California’s. />
/>There could be legal consequences for an employer trying to use a non-compete agreement. />
/>· If someone is told to sign such an agreement or he or she will not be hired or will be fired, the employer would be breaking the law and could face a lawsuit from the job applicant or employee for wrongful termination. />
/>· Just asking someone to sign an agreement not to compete or trying to enforce it against an employee or subsequent employer could result in legal action for unfair competition. />
/>California Business and Professions Code section 16601 provides an exception to this blanket rule. />
/>· A buyer of a business interest can enforce a covenant not to compete against the seller. />
/>· This includes merger arrangements in which an employee sells his business interest in a company by exchanging his shares in that company for shares of the newly merged company. />
/>An employer can, however,, legally limit the type of information an employee can use while employed and in his future employment. For example, . />
/>· Employees can be prevented from competing with their employers during their employment. />
/>· Confidentiality provisions in an employment agreement can prevent disclosure of trade secrets (such as customer lists, vendor lists, pricing, product information and strategic business information and plans). After leaving a job and joining a competitor, an ex-employee would not be able legally use this protected information against the employer, including not using trade secrets to solicit customers after the worker leaves the job. />
/>· As part of an agreement an employee can also agree not to try to solicit other employees to quit their jobs and join another company.

If a non-compete agreement has been presented for you to sign, either for you to be hired or as a condition to keep your job, contact a lawyer.

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