Non-competes are rarely enforceable (except the trade secrets part). They are there largely to intimidate employees into not working for competitors. Designers and engineers may need to plan on taking a gap between stints at competitors, but the losing company would typically need to pay them for the privilege of allowing their knowledge to become out of date.
If you think a NCA would unduly impact your ability to work somewhere else, talk with a labor attorney (even if you’ve already signed one). In order to enforce, employers need to jump through all sorts of hoops, and chances are pretty good they won’t be able to make it stick without compensation.
“Not sure what you mean, music, but every Labor Atty our Company has hired has said that non-competes are not really enforceable in California except for key, strategic positions.”
That was my exact point, that california law (and I would assume court decisions) have all but nullified non compete clauses in contracts. I suspect what another poster wrote is true, that non compete clauses are kind of like the disclaimers you see on baseball tickets or the liability waiver you might have to sign with certain events, they are designed to keep the person from suing, when in practical reality the waiver on a baseball ticket, or the liability waiver you sign absolving the event organizer of liability if you get hurt, is basically worthless in court.
@ChowdyCat I have never heard of being paid for a non-compete after leaving. Can someone explain that please?
Sure - what it means is that if a company has a non-compete that you are bound by, and you leave that company for a competitor listed in the non-compete agreement, then you company pays you for the time you have to wait until joining the competitor. So if you have a 3 month non-compete, after resigning you can’t work for the competitor for 3 months, so the company you resigned from, must pay you for that period. Its a 3 month paid vacation
Gosh, musicparent. Don’t be so quick to come to that conclusion. The liability waiver on those tickets may be quite enforceable, unless there was some negligence or other things going on. Non-competes are also governed by state laws, and some states are more employee-friendly than others. WA is on the not so employee friendly spectrum.
Ballerina, if you are talking about Zenimax v Oculus, my understanding is that NDAs (in addition to copyright, trade secret misappropriation, etc) were ithe center of the dispute. Non-disclosure agreements and non-compete agreements are not the same deal. In a nutshell, NDAs are used as one of the bricks in the wall built to protect the company’s intellectual property. Non-competes are just that: you are not going to engage in the same line of business for a certain period of time, within a certain geographic area, etc. As the other posters mentioned, a company has to give you something in return for you to agree to limit your employability. It is a good idea to talk to an employment attorney if you are not sure what you are signing away. Do not rely on the advice of Internet posters, the majority of us here are laypeople just like me.
@bunsenburner:
The wording on those tickets is pretty much legally unenforceable, and this has been proven time and again in court. I was involved with plenty of events where there were such waivers, and in business law they said that those kind of liability waivers have almost no bearing in court, whether it is the back of the ticket “ticket holder by purchasing this ticket aggrees to waive the seller of any or all liabilities from this ticket”. Technically, if you read the back of the ticket for a baseball game, that absolves the team and stadium owner of any or all things that happen during the game including negligence, but that isn’t true.
An outing at an amusement park done by a group (did plenty of those in college and with other groups) usually required a signed waiver, and we were told outright by lawyers that they basically were designed to stop someone from suing but couldn’t legally stop someone from suing. As far as negligence goes, implicitly when someone sues it is about negligence, otherwise they wouldn’t have a case in the first place to sue. If someone sues a ball team because a bat flew into the stands and hurt them, like that poor woman at Fenway a couple of years ago who was seriously hurt, they would basically sue on the grounds that the team didn’t do enough to protect fans (ie negligence).
The basic concept described to me in my business law course was you cannot sign away your rights like that (guy teaching it was a Harvard Law JD with a lot of years experience). I suspect with the California stance on non compete clauses it was much the same idea, that signing away a right like that gives too much power to the one who asked you to sign or accept it.
As described to me by our Labor Attny, it’s also bad public policy (from the perspective of the State Labor Commissioner). For example in the last down turn ('08/09), thousands were laid off. It would be brutal (and costly to the taxpayers) to say that they could not go get a similar job with a competitor.
musicparent, your personal experience and the fact that someone with a Harvard JD degree said something does not mean that things always go the way you stated. Of course one cannot sign away the right to sue for negligence, but that does not mean that every injury is actionable. Every situation depends on the law of that state and the facts of that specific case. Of course, to sue, someone has to state a cause of action, that the team was negligent etc. but there are plenty of defenses… again, it is all about state laws. Ditto non-competes, so let’s stick with the topic of the thread. Again, it is all about how the state law treats those clauses. In CA, they are simply unenforceable, which means no cause of action. I would be careful to say that a very restrictive agreement would be automatically thrown out by any court. There are cases here in my state where a company went after a former employee who signed a very restrictive non-compete clause - and the co won. Rant: Our state legislature needs to get their act together if they want to poach CA businesses/ end rant.
With very few exceptions, non-competes are unenforceable in CA.
The law was strengthened slightly as of Jan 1, 2017, as some employers were trying to use forum selection to get around CA laws by requiring that litigation/arbitration take place in another state where the laws are more employer friendly, and also more costly for employees to fight. The new law states that forums outside CA are unenforceable unless the employee was represented by counsel in negotiating the contract and agreed to an alternate forum.
I signed an employment contract with a 2 year non-compete term that required arbitration/litigation in another state, and it didn’t include any monetary compensation during that period. I knew it was unenforceable so I didn’t worry about it, but for those who don’t know better, they can be intimidating. That’s what the employer wants and why they still include them.
If the employer really wanted to be intimidating, there’s nothing stopping them from still filing to enforce the NC in another state. The employee would then have to commit time and money to fight it. The law attempts to address this by further stating that attorney fees can be awarded to the employee (even if the employee loses), but never to the employer regardless of what the contract states.
If an employee has to go to court to enforce their rights the court can award attorney fees to the employee. No attorney fees can be awarded to the employer per this law, even if the employer wins a dispute. (Note: there may be an attorneys fees provision in the contract which could award fees to whoever wins a dispute.)
The NC I’m most familiar with are for broadcasting, usually on air talent. Often can’t work in same market for 1-2 years. Lots of weather people around here have left one station and then worked free lance or PR job until time was up and then would pop up at new station. Not fired but usually at time of contract renewal so not always their choice to go but seems NC held up.
@bunsenburner:
Issues of civil litigation always depend on the state, and yes, if you sue someone because something happened it has to be on the basis of something, and usually in the case of let’s say injury, would be based on negligence, that doesn’t change. What I was talking about is that in a lot of places in this country, if I let’s say got hurt at a ballpark and sued on grounds of negligence, that waiver is meaningless, even though many of them directly state that you agree to absolve the provider of all responsibility in case of an accident which basically means the right to sue…in my example, if I went into court and let’s say the NY Mets’ lawyer said “your honor, I ask for summary dismissal of this case because the plaintiff by accepting admission to the park agreed to the waiver on the ticket, which protects the team from being sued”, would lose. The lawyer could argue that my grounds for negligence were baseless and ask for a dismissal, but the waiver couldn’t stop my right to sue in the first place, that’s all, the waiver exists to discourage people from suing even if they might have grounds, hoping reading that they would say “oh, I signed that, I can’t sue” and walk away (and yes, lawyers in more than a few places have gone into court using a liability waiver, and it is routinely denied. Depends on the state, I suspect there are states where conservative judges allow that and dismiss the case, the law is always what a particular judge says it is).
A non compete clause in a contract is there to discourage people from leaving for a competitor, but when it gets into court the law based on precedent like with the waiver doesn’t necessarily, or most of the time, view the NC as ironclad it seems, others have pointed out that California law and precedent in suits makes the NC almost impossible to enforce, the same way that a liability waiver cannot stop someone from suing whether negligence is there or not, that is why I used that analogy and it is quite valid, what you are talking about is if someone can sue for grounds outside negligence, that is an entirely different matter.
Like I said, the disclaimers on the back of amusement park tickets are not comparable with non-compete clauses. Let’s stick with non-competes, musicparent. To say that they need not be worried about is quite an oversimplification. What happens in CA stays in CA, and other states’ courts do not follow CA law.
Not surprising. Non-competes favor incumbent large employers over employees and startup or small employees that need to hire to grow. The incumbent large employers are likely to have stronger lobbying relationships with legislators.
Note also that the states that allow non-competes usually do not have clear bright lines as to what is considered reasonable and enforceable and what is not, so that employers and employees must litigate to find out. Obviously, this is usually to the disadvantage of the employee, who is less likely to be able to afford the lawyer costs. Since lawyers are disproportionately represented among legislators, perhaps writing the laws to encourage litigation is in the interest of their profession.
“Since lawyers are disproportionately represented among legislators, perhaps writing the laws to encourage litigation is in the interest of their profession.”
Don’t be so quick about making such unsupported statements, please. I know some lawyer-legislators who were very much in favor of going the CA way. Startups too need legal advice, and restrictive NC clauses stifle startups’ ability to attract talent and to thrive. So it can be argued both ways.
I’ve been told by an employment attorney that WA courts throw out all but the most directly impactful non-compete cases.
Our small company was bought by a larger French company. The new non-compete says I cannot work within 3000 miles of any of the companies offices or customers. That leaves me with South Africa, Antarctica, and Australia. I have not signed it.
I worked in banking most of my life. They usually pay for non-compete period, and often it is 3+ months. We call it garden leave. I have a non-compete with my current employer (non banking), and it is only for not poaching other employees for a year, but not for working for a competitor. I have worked around tri-states of NYC for all of my life, and I know non-compete (of not working for another company without pay) is really not reinforceable because no judge is going to rule for someone not to be able to earn a living, the only way it is done is if an employer is willing to pay for the non-compete period.
