Restrictive Covenants

Restrictive Covenants & Noncompete Agreements

Leveling the Playing Field in CA with Noncompete Agreements

Do you possess a highly advanced degree or specialized skill? Do you possess knowledge about the manner in which your employer manufactures a particular good or provides a specialized service? If so, you may have heard the terms “restrictive covenant” or “noncompete agreement.” Your present employer may have attempted to get you to sign such an agreement. Perhaps your employer even carried out retaliatory measures against you for your refusal to sign such an agreement. What precisely is a noncompete agreement, and what do you need to know about these agreements?

A noncompete agreement or restrictive covenant is an agreement you make with your employer in which you agree that you will not leave your employment with the employer and go to work for a competitor or form your own company that will compete with your employer. For example, if your employer provides a highly specialized computer service, your employer may try to get you to sign a noncompete agreement that would prohibit you from leaving your employment and starting your own business offering a similar service to that of your employer.

The Main Problem With Noncompete Clauses in California is…

California courts have previously decided that noncompete agreements that seek to prohibit one person from opening a business that may compete with another business are void and cannot be enforced. Even agreements that purport to be subject to the laws of a different state have been rejected and declared unenforceable by California courts. Because noncompete agreements are void in California, your employer cannot force you to sign such an agreement as a condition of your employment or take retaliatory measures against you if you refuse to sign a noncompete agreement.

This does not mean, however, that your employer is not without legal protections.

Exceptions to the General Rule Regarding Noncompete Agreements

Although most noncompete agreements are unenforceable in California, an employer does have a right to prohibit you from using a trade secret in a future business venture or delivering a trade secret to a competing company.

A “trade secret” can include:

  • A secret or specialized way in which a business manufacturers a product
  • Any other information that gives a business a competitive advantage over another business

In addition, if you are the owner of a partnership, LLC, or similar business entity, you can be prevented from selling your interest in the business, starting a substantially similar business, and siphoning customers away from your former business.

Contact a California Noncompete Agreement Lawyer

If your employer has presented you with a noncompete agreement or has threatened you with disciplinary measures or termination if you refuse to sign a noncompete agreement, contact the Law Offices of Gay Carroll-Haring immediately. I can assist you in protecting your legal rights and helping you determine whether your employer has presented you with a void noncompete agreement or a legitimate and permissible contract that protects your employer’s rights.

Contact my office today by calling 916-443-3553.