San Diego Non-Competes Attorney

Non-compete agreements, also known as restrictive covenants, are contracts that employees sign agreeing not to work for a competitor or start a competing business for a certain period of time after leaving their employer. These agreements are commonly used by companies to protect trade secrets, confidential information, and client relationships.

However, in California, non-compete agreements are viewed much more strictly than in other states. California Business and Professions Code Section 16600 generally renders non-compete clauses unenforceable as a matter of public policy. There are limited exceptions, but employees in California have significant protections.

If you have signed or been asked to sign a non-compete agreement in San Diego, this guide will provide general information on your rights and options. For more legal advice on your particular situation, please don’t hesitate to speak with us at the Hamparyan law firm. Our experienced non-compete attorneys are ready to listen and guide you on your legal options. Call us at (619) 550-1355 to schedule your consultation with a competent lawyer today.

What is a Non-Compete Agreement in California?

A non-competition agreement, also called a restrictive covenant, is a contract between an employer and employee. As part of the employment terms, the employee agrees not to work for a competitor or start a competing business for a certain period of time after leaving the company. The scope of activities prohibited under a non-compete varies:

• They may bar working in a certain geographical area (for example, 50 miles from the employer’s location).
• They may prohibit working for a direct competitor.
• They may prevent soliciting former customers or clients.
• They may prohibit working in a narrowly defined industry niche.

The duration of non-compete agreements also differs widely, from six months up to several years.

In most other states, non-competes are generally enforceable within reasonable bounds. However, California law starts from the presumption that restrictive employment covenants violate public policy. As a result, the scope of enforceable non-competes in California is very narrow compared to elsewhere in the country.

Are Non-Compete Agreements Enforceable in California?

Generally, non-compete agreements in employment are not enforceable in California. The state has very employee-friendly laws regarding non-competes. Under California Business and Professions Code Section 16600:

“Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

Essentially, this statute says that non-compete agreements which prevent employees from working are invalid in California. The policy goal is to support employee mobility and free competition. There are a few narrow exemptions where “limited” non-competes may be enforced in the state:

• Sale of a business (goodwill exemption)
• Dissociation from a partnership
• In very limited cases, to protect trade secrets.

However, even these exceptions are narrowly applied by California courts. The non-compete must be limited in scope and duration to only what is reasonably necessary to protect the company’s important business interests. Overly broad non-compete agreements are viewed as restraints on trade that violate public policy under California law. Courts can and do refuse to enforce unreasonable restrictions.

What is a Non-Solicitation Clause?

A non-solicitation clause is a common alternative to traditional non-compete agreements under California law. These clauses restrict employees from soliciting customers, clients, vendors, or other employees to leave the company. However, they allow employees to work for or start a competing business.

On-solicitation agreements face less legal scrutiny than outright bans on competition. Courts are more likely to enforce narrow restrictions on directly soliciting key stakeholders rather than blanket prohibitions on engaging in a profession. Typical non-solicitation clauses may prohibit contacting:

• Former customers or clients
• Current customers or clients if you serviced them recently
• Actively pursued prospective customers or clients
• Company vendors or suppliers
• Other company employees (for example, enticing them to leave).

Just like with non-competes, restrictions must be limited and reasonably tailored to protect legitimate business interests under California law. Overly broad non-solicitation clauses are at high risk of being deemed unenforceable.

Speaking to an attorney can help employees understand if a non-solicitation agreement they signed is lawful or if certain provisions could be challenged. Lawyers can also help negotiate more reasonable terms when these clauses are proposed.

What to Do If Asked to Sign a Non-Compete

If your employer asks you to sign a non-compete agreement, here are some tips:

• Review any contracts carefully before signing. Make sure you understand the terms and obligations.
• Consult an attorney before signing anything or if anything needs clarification.
• Try to negotiate more reasonable terms.
• Consider whether the agreement is limited to only protecting legitimate trade secrets.
• Understand that even if you sign an unenforceable agreement, your employer may still try to enforce it until challenged.
• Avoid disclosing or using sensitive company information improperly.
• Maintain copies of all signed agreements for your records.

Documenting information and getting legal advice early allows you to make the most informed decisions about contracts you sign related to your employment. Knowledge and preparation are key to protecting yourself.

Can I Refuse to Sign a Non-Compete Agreement in California?

Yes, as an employee or contractor, you may refuse to sign a non-compete in California. Employers in the state are prohibited from firing, demoting, discriminating against, or retaliating against a worker who does not sign a non-compete. However, you as a worker should understand that there may be implications in how you respond to the contract.

While you cannot be terminated solely for refusing to sign an unenforceable non-compete in California, it can impact your employment relationship. In some cases, the employer may insist on the enforceability of the contract, and you may have to take steps to legally protect yourself. Further, even if you have not signed a non-compete, you are still prohibited by law from sharing trade secrets or misusing confidential information.

If you need sound legal advice on how to respond to your employer’s non-compete, talk to our knowledgeable attorneys at the Hamparyan law office. We’re eager to help you understand your rights and apply negotiation strategies to your specific situation.

What Happens If You Violate a Non-Compete?

If you leave your employer and violate a non-compete agreement you signed, several things could happen:

• Your employer may send you a “cease and desist” letter.
• They may file a lawsuit against you to get an injunction.
• They may sue you for breach of contract damages.

Even if the non-compete turns out to be unenforceable, your former employer can still tie you up in expensive litigation. Defending yourself is costly, stressful, and disruptive. This is why it is critical to comply with non-competes or get legal advice before taking any action that could be viewed as violating your agreement. Understanding enforceability ahead of time can prevent significant hardship down the road.

When You May Need Legal Assistance

Consulting and potentially retaining an attorney may be necessary regarding non-competes if:

• You are threatened with legal action over a violated agreement.
• You are unsure if a non-compete you signed is enforceable.
• You need help negotiating employment agreements with restrictive clauses.
• You want to leave your employer to work for a competitor.
• You’re a former employee who previously signed a non-compete.
• You wish to start a business that could violate an existing agreement.

Employment lawyers can inform you of your rights, obligations, and options when it comes to non-competes in California. At Hamparyan, our experienced attorneys can also represent you if a dispute arises over a restrictive covenant.

Frequently Asked Questions About Non-Compete Agreements in California

Can my employer fire me if I don’t sign a non-compete agreement?

No, your employer cannot fire you solely for refusing to sign a non-compete agreement in California. This would qualify as wrongful termination in violation of public policy under state law. However, refusing may negatively impact your working relationship or future advancement opportunities. Getting legal advice can help you understand the risks and negotiation tactics in your specific situation.

What happens if only part of my non-compete agreement is unenforceable?

In some states, courts can “blue pencil” non-compete agreements, meaning they may strike unreasonable clauses but enforce the remainder if lawful. California, however, does not allow blue-penciling of non-competes. There is a possibility of allowing “reformation,” which is the rewriting of an agreement to make it enforceable. In Kolani v. Gluska (1988), the court held that restrictive covenants can be revised only if “the parties have made a mistake.”

You’ll want some legal certainty as to whether some clauses of the non-compete agreement can be enforced. An attorney can assess if only part of your agreement might be enforceable.

Do non-compete agreements signed outside of California apply when I move for a job?

Generally, if you work in California, the state’s law on non-competes applies to you, regardless of where you signed or whether your company is headquartered out of state. This was clarified in September 2023 when Senate Bill 699 became law. Note, however, that legal nuances apply regarding choice of law and contract formation issues. Consulting a lawyer regarding your specific out-of-state agreement is important.

Can I negotiate the terms of a non-compete agreement before accepting a job offer?

Yes, you may be able to negotiate aspects of a proposed non-compete agreement as a condition of your employment. Factors like geographic scope, restricted duration, and breadth of prohibited activities can possibly be narrowed. Speaking to an attorney beforehand equips you to try to improve unreasonably broad terms during the offer process.

Is a non-solicitation agreement the same as a non-compete?

No. Non-solicitation agreements only limit soliciting customers or employees but allow you to work for a competitor. Non-compete clauses prohibit you from being employed or starting a competing business. Non-solicit agreements face less legal scrutiny.

Are non-poaching agreements between companies legal in California?

“No poaching” agreements involve companies agreeing not to hire each other’s employees. While more common in tech, these agreements violate California law and public policy in most cases by unfairly restricting employment options. Class action lawsuits have successfully challenged no-poaching clauses.

What information would be considered a trade secret?

Under the California Uniform Trade Secrets Act, a trade secret involves confidential business information that provides economic value and competitive advantage because it is not known widely. Customer lists, proprietary formulas, production methods, and private technical data may qualify. Overly broad definitions often fail legal scrutiny.

How long can a non-compete agreement restrict my work?

California courts focus on the reasonableness of restrictions when assessing covenants not to compete. In some cases, agreements limited to under a year may be viewed as more likely enforceable depending on the interest protected. Longer terms face greater skepticism regarding validity.

Can I be sued for violating an unenforceable non-compete?

Yes, the former employer can still file a lawsuit against you even if your non-compete turns out to be unlawful and unenforceable. Getting sued, even wrongfully, can cost significant money, stress, and business disruption while the case resolves. Understanding your rights from the outset provides the best protection.

If I leave my employer, can they start enforcing a non-compete I signed previously?

No – even if your non-competition agreement is in the very limited category of enforceable non-competes in California, your employer cannot suddenly apply it if it was not already in effect when you were employed. Continued employment is required for a restrictive covenant to be enforceable.

How Hamparyan Law Firm Can Help

Hamparyan Law Firm consists of knowledgeable attorneys with competence in employment contracts and disputes in San Diego. Our non-compete lawyers can provide counsel if you are:

• Unsure if a non-compete you signed is enforceable
• Facing potential litigation over an agreement
• Struggling to negotiate reasonable employment terms
• Concerned about violating a restrictive covenant.

With decades of experience under our belt, our firm can help you understand California employment law, non-compete laws, and your rights. We can also handle cases involving unfair employment practices and wrongful termination.

If you have signed or been asked to sign a non-compete in California, call Hamparyan Law Firm at (619) 550-1355 for a free consultation and case review.