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Does California enforce non-compete agreements?

On Behalf of | Dec 6, 2022 | Employer Defense

If you’re moving from another state to California to start a business, it is important to understand how the laws are going to differ from one state to the next. Do not assume that they are going to be exactly the same. Doing so can get your business into legal trouble.

One example of this is when it comes to non-compete agreements. These are essentially legal contracts, saying that an employee cannot leave a business and start a competing business or work for the competition. They typically have to have some sort of restriction in terms of the geographical area they cover or how long they last – or both – but they can prevent workers from leaving and taking other jobs. If you would like to include these provisions in your employment contracts to protect your business, is California going to honor them?

These are actually prohibited in California

It’s not just that California is not going to honor a non-compete agreement or that the courts aren’t going to enforce it if it winds up starting a lawsuit. It goes beyond that. California actually prohibits the use of noncompete agreements.

Despite this, experts do note that many workers are often given noncompete agreements as part of their employment contracts. This can have a major detrimental impact on their careers, which is why it is prohibited. But it often happens to low-wage workers, so do not assume that it is only for executive positions or that it can be used at any level.

Why is it illegal? Workers in California have the right to choose their own jobs and their own careers. Former employers cannot dictate future employment decisions. This may be allowed in other states, but it is far from a universal right, and California does not recognize it under state law.

Avoiding crucial mistakes

As a business owner, you want nothing more than for things to go smoothly for the company, for you and for your employees. You need to know exactly what the legal steps you can take to make sure that happens.