Many employers require employees to sign an agreement restricting them from working for business competitors for a period of time. These are commonly known as non-compete agreements. The concept is that an employee can do harm to his employer if he leaves and begins working for a competitor.
Many, if not most, of these agreements are not worth the paper upon which they are written. This is because there are no uniform laws or standards that govern enforcement of the agreements. Disputes in this arena are mostly decided by state court judges based on the facts and circumstances of each case and the standards that have been developed in the state.
For a non-compete agreement to be enforced, it must be written in such a way as to prevent actual harm to the business entity. Remote chances of harm will not support enforcement of an agreement by a court. Similarly, if an employer requires all employees to sign an agreement when in reality only a small percentage of employees could actually do harm by going to a competitor, then enforcement is not likely.
In today’s business environment, companies headquartered in one state often have employees in multiple other states. Some employers in this situation will include a provision that specifies the standards to be enforced, based on those of the state of headquarters or another state in which it has employees. The goal of the employer here is to try to use standards of the state most friendly to non-compete agreements.
In practice, the action to enforce is normally brought in a court of the state in which the employee actually works. Most local courts are not inclined to enforce non-compete standards that are contained in the agreement but not reflective of those of the state in which the employee worked. Workers in California have the benefit of being in one of the states that does not honor non-compete agreements except in extraordinary circumstances. Contact Labor Law Office, APC today to speak with an experienced general labor law attorney in Sacramento.
Sacramento, CA 95821