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What is the crux of California’s ban on noncompete agreements?

| Mar 11, 2020 | employment law |

There is a lot of paperwork a person must put their “John Hancock” on when they are newly employed. While some of this paperwork may seem routine, one document that some employers may have their newly-hired employees sign is a noncompete agreement. However, are such agreements legal in the Golden State?

A noncompete agreement is a contract between an employee and employer in which the employee agrees that they will not compete with the employer for a certain amount of time after leaving the employer’s employment. This may mean an employee cannot work for a competitor for a certain time period or take away customers from the employer for a certain amount of time.

In California, noncompete agreements are generally considered void. According to some, they impede one’s inalienable freedom to work, they protect the ongoing flourishment of the free market and they prevent a chilling effect on innovations — something that is key in California’s technology industry.

However, there are those who say that employers have more interest in investing in employment training when they know employees will not leave and take that knowledge to a competitor. Some will also argue that employers have an interest in protecting their trade secrets. Thus, noncompete litigation can take place when an employee wishes to strike down a noncompete agreement or an employer wishes to enforce one.

Whether California law strikes a balance between protecting both employees and employers may be disputed by some. It is important that those who have questions about the enforceability of a noncompete agreement seek the help they need to understand their legal options. Employment law attorneys in California understand the state’s laws on this topic and may be a useful resource.