Employers usually argue that they invest a lot of time in money in their employees. They say they shouldn’t have to worry about an employee leaving their company to work for another business. They shouldn’t have to worry the employee will start up a new business that will compete with the original employer.
Los Angeles employees counter that they have a right to make a living. They shouldn’t be forced to sign a bad employee contract because the employer is hanging a non-compete clause over their head. In an age when long-term employment is a thing of the past, employees need the flexibility to look for new work.
Rights of employees to contest non-compete contracts in California
Fortunately, in California, employees do have the right to contest non-compete clauses in contracts. Non-compete clauses and non-solicitation clauses restrict the employee from working in a competing job or soliciting any business that the original employer may desire.
Many states approve non-compete clauses if they meet the following conditions:
- A timing requirement. Non-compete clauses in other states are often valid if the restriction is for a minimal amount of time – one year or two at most. A five-year restriction is likely to be ruled invalid and unconscionable.
- A geographical requirement. The farther away an employee moves, the less likely they are to compete with the original employer. Employers generally will not be able to enforce a non-compete clause that forbids an employee from working in another state. Generally, any restrictions beyond a 50-mile radius are suspect. Employers can normally restrict workers from competing in the same town, county, or small geographical radius.
California makes it easier for employees to challenge non-compete clauses. In California, all non-compete contracts are void. The California law applies even if the employer reasonably believes the employee may take trade secrets with him/her. The employer must wait until the employee uses the trade secrets or other intellectual property before filing a claim. The basis of California’s non-compete law is that the current economy dictates the employers often need to change jobs to provide for their families. Employers don’t hesitate to fire employees to save money. Employees should have the same right to seek new employment to better their lives.
Many employees are not even a remote threat to the employer’s business. Workers who have a skill such as plumbing or carpentry or work in healthcare or retail are usually just looking to get a good paycheck with benefits.
Claims against employers who wrongfully terminate or fail to hire employees based on non-compete clauses
Employees can file legal claims against employers who:
- Refuse to hire an employee who won’t sign an employment contract with a non-compete clause
- Fire an employee who refuses to sign a new employment contract that has a non-compete clause
- Seek to enforce a non-compete clause
If an employee is fired for exercising his/her rights in Los Angeles, the employee can file a wrongful termination claim. Often, the employer will then try to argue that the employee was fired for other reasons. Employees, in wrongful termination cases, can seek:
- Job reinstatement
- Back pay and back benefits
- Legal fees
- Additional Damages
Exceptions to California’s non-compete clauses
There are several statutory exceptions. This means there are some situations where an employer can restrict another person’s trade or business. The exceptions include:
- The sale of a business. The buyer can enforce a provision in the sales agreement which restricts the right of the seller to open a competing business. This exception also applies to business partners and limited liability corporations who sell their interest in the company. The restriction does need to be limited to a definite geographical area.
- Intellectual property. Employers do have the right to enforce trade secrets (including customer lists) and other intellectual property rights such as copyrights and patents.
Some of the artful ways employers try to get around the non-compete clause
Employees should review their employee rights with experienced Los Angeles non-compete attorneys. Employers often try to force employees to sign contracts that are essentially aimed at getting around a non-compete clause. For example,
- Employers may require that employees give an extended notice (90 or 180 days) instead of the typical two-week notice.
- Employers can try to force employees to sign employment contracts that hold that disputes should use the law of the state where a company is headquartered – if the headquarters are not in California
The law in Los Angeles is clear. Non-compete and non-solicitation clauses in employment contracts are illegal. At the Los Angeles law offices of Stephen Danz & Associates, we understand how important it is for you to work in your chosen field or profession. We hold employers accountable who fail to honor and respect your employee rights. To learn if you have a legal claim against an employer who is trying to restrict your right to work and to compete, call (877)789-9707 to make an appointment. Se Habla Espanol.