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Frequently Asked Questions - Non-compete Agreements
The company I work for had me sign a noncompete, is this legal?
Forcing you to sign a noincompete agreement in this state likely violates California's public policy. Noncompete agreements are void and unenforceable under our Business & Professions Code, and have been for many decades. The exceptions generally related to the sale of a business, partner interest - which won't be discussed here.
So, my company can't enforce the noncompete against me; right?
Typically that's true. However, because employers know that noncompetes are not supported by California law many of these agreements contain other types of restrictive provisions subjecting special benefits (like deferred compensation) to forfeiture clauses. Additionally, some agreements expressly name the laws of another state as controlling in judging the validity and enforceability of the noncompete. These tactics may or may not prevent you from lawfully competing in this state, but you'll need the help of an employment law attorney to understand your risks.
So why do other websites say noncompetes are completely unenforceable?
See the paragraph above. Many commentaries about noncompetes don't appreciate the practical reality that few are designed as simple noncompete agreements. What's more likely is the agreement contains non-solicitation, non-disclosure, non-interference clauses, a choice of laws provisions, and worse - monetary "clawbacks". Often, very skilled lawyers will draft these agreements for employers.
So what can my employer do to me if I ignore the agreement and compete?
If it's a simple CA noncompete agreement - usually not much, assuming you don't have restricted stock or other retained incentives that may be forfeited. If there are parts of the agreement that may be valid, or if the agreement is enforceable under the law of another state, you may have a battle or race to the courthouse. Employer attempts at enforcement can get expensive for the employee, time consuming, and may interfere with your new career and/or employer - regardless of whether your former employer prevails. Suffice to say, don't assume it's meaningless.
What can I do about it?
The best advice is to have the agreement reviewed by a qualified attorney. If it's a simple agreement, it will likely cost you very little develop a strategy. If the agreement has complexities you'll be much better off understanding the options and alternatives available to you - including specific strategies to limit your risks.
The Law Offices of
THOMAS C. WALKER
228 Hamilton Avenue, Third Floor
Palo Alto, CA 94301-2529
Employment Law Practice