Competition agreements are generally not valid in California, subject to narrow legal exceptions. First, the buyer of a business can prevent the seller of the business from competing directly with the business in the future. This derogation applies to both owners and shareholders of a company. Knowing how best to navigate through the very limited exceptions is not only critical, but also extremely interesting and very important for state employers who use employment/employer agreements to protect their trade secrets, intellectual property, and other business values. A legal proceeding called Filipoint, LLC vs. Maas makes it clear that simply signing an employment contract during the sale of a business does not mean that competition bans are enforceable. In this case, an employee of the company sold his shares and also approved a share purchase agreement. If you adopt a new position and are asked to sign a non-competition clause, you must receive legal aid just before the agreement is signed. It is important that you know if the agreement is applicable before signing any documents. Whether you need help negotiating a contract, verifying an employment contract, or receiving notification of an pending civil action or dismissal order, contact Perkins Asbill, A Professional Law Corporation at 916-446-2000. We have over three decades of employment law experience representing clients in Central and Northern California.
This does not mean, however, that there are no borders to competition in California. California employers have a few tools at their disposal without access to self-assessment. First, there are three legal exceptions to California`s prohibition of non-competition: a non-compete clause may be applicable to the seller of a company, a former business partner, or a former member of an LLC. Callus. Bus. Teachers. Code §§ 16601-16602.5. Second, California employers can legitimately prohibit their employees from using trade secrets. For example, while employers cannot prohibit their former employees from recruiting clients, they can prohibit the use of trade secrets (for example. B lists of owner customers.. .