Q: Several years ago when I was hired, the employment agreement had a non-compete clause that said for 12 months after my employment ends, I cannot solicit business from any of the company's customers. I am now leaving, going to work for a group that does compete to some degree with my current employer, and many of the customers indicate they want to work with me at my new job. Am I going to get sued?
- R.L., Redondo Beach
Answer: Under Section 16600 of the California Business & Professions Code, noncompete agreements are illegal in California. There are very narrow exceptions only, found in Section 16601, which involve dissolution of or disassociation from a partnership, or as part of selling an interest in a business, or related to dissolution of a limited liability company.
Many cases, including at the California Supreme Court level, emphasize the strong public policy in California against noncompetes, and the right of people to gainful employment. Thus, I doubt your prior employer will sue you for violation of the noncompete, but employers today sometimes try to find other bases to bring a claim (such as alleged misappropriation of trade secrets). Thus, one suggestion is talk out with your prospective employer the concerns you have, and try to get them to agree to protect you (i.e., defend you, at their expense), if the prior company comes after you.
In either event, employers often are very challenged if they do bring claims against former employees, because California courts tend to be vigilant in enforcing the public policy favoring the ability to seek and obtain gainful employment.
Q: I am leaving a company after many years, going with a start-up, and a number of my current staff would like to go with me. Am I going to get in trouble if they come on board with me?
- W.B., Long Beach
A: You are entitled in California to solicit employees from your former employer, so long as you do not use unlawful means or engage in acts of unfair competition. It is a bit difficult to specifically define "unlawful means or acts of unfair competition." One example would be if you are in a fiduciary position at your current employment - that is, a position of heightened trust (perhaps an officer of a corporation or a board member). Then, it could be very risky if, while still employed, you are encouraging others to leave with you. Further, if you engage in false pretenses to induce some of your current employer's staff to exit along with you (make up a story, for instance), that may be a problem.
The most prudent behavior is to leave on your own accord, inform others where you have gone in a generic manner, and let those who worked with you decide independently what they choose to do.
Q: Am I at liberty to accept a job from my current employer's client?
- H.B., San Pedro
A: Short answer: Yes. California case on point is Morris v. Harris. The court quoted Business & Professions Code Section 16600, which reads: "Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." The court further noted that any work the former employee obtained was after he left the prior job, and that he was solicited by the customer, not vice versa.
Ron Sokol is a Manhattan Beach attorney with more than 30 years of experience. His column appears on Wednesdays. Email questions and comments to him at RonSEsq@aol.com or write to him at Ask The Lawyer, Daily Breeze, 21250 Hawthorne Blvd., Suite 170, Torrance, CA 90503. This column is a summary of the law and not a substitute for legal consultation on any particular case.