Non-Compete Attorney in Santa Clara

Santa Clara employers often try to restrict the rights of employees to move to a new job. They manage the restriction by forcing the employee to sign an employment contract that has a clause that says – the employee agrees not to take a job with a competitor after the employee leaves. The clause usually also sets forth what financial damages the employee will be required to pay for violating the non-compete clause.

Employees in Santa Clara and throughout California were usually bound by these non-compete agreements – even though employers could terminate them for almost any reason. And even though employers weren’t bound to offer pay increases or improve employee benefits.

Fortunately, California has decided that employees deserve the right and freedom to work where they can best advance their career and make the best living. The Business and Professions Code provides that, with limited exceptions, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” This means non-compete and non-solicitation restrictions are void. Non-solicitation agreements are agreements by employees not to seek new business from the employer’s clients and customers.

The law applies to all types of skills and jobs.

How employees can enforce their rights regarding non-compete contract clauses

Employees have the right to file a wrongful termination case if an employer fires them because they refuse to sign non-compete clauses. Damages include:

  • Job reinstatement
  • Lost income
  • The value of any lost benefits such as insurance and pension benefits
  • Legal fees

Job applicants can seek employment if the sole reason an employer refused to hire them is due to the applicant’s refusal to sign a non-compete clause

Employees can assert the California law against any employer who tries to enforce a non-compete clause

How non-compete clauses worked before the new law

Before the Business and Professions Code enacted the restriction on trade law, employers in California could require that employees sign non-compete clauses. Most other states still permit non-compete clauses. Typically, employers could enforce non-compete clauses with two exceptions:

  • Geographical area limit. The non-compete clause had to be limited to the area where the employee or new employer would reasonably be seen as competing with the old employer. For example, prohibiting a worker from engaging in the same time of work was not valid if the employee couldn’t work beyond a 50-mile radius from the old job.
  • A yearly time limit. Non-compete clauses couldn’t bind the employee forever or even for a long time. Generally, restrictions beyond a year or two are invalid.

Fortunately, for Santa Clara workers, the new California law recognizes that employees will need to change jobs multiple times during their career.

When non-compete clauses in Santa Clara may be legitimate

There are two main exceptions to non-compete provisions.

The first is that buyers of businesses have the right to negotiate that the sales agreement should forbid the seller from setting up a competing business. The same idea holds for sellers of partnership interests and interests in limited liability corporations. If the seller agrees not to compete, in writing, the buyer can seek to enforce that clause – if the seller opens a new business or goes to work for a competitor. As with general restraint of business clauses, the buyer can’t restrict the seller from working in a distant location or for an indefinite or long period of time.

The second is that employers can require that their employees not disclose or use company trade secrets or intellectual property.

Techniques Santa Clara employers use to get around the California non-compete law

Some employers try artful ways to prevent competition despite California’s law against restrictions in employment contracts. Employees should speak with experienced Santa Clara employment lawyers before signing their employment contracts and if employers seek to prevent them from working in a competing job.

The two main strategies employers are trying are:

  1. Requiring that the employee give three to six months’ notice before leaving a job instead of the usual two weeks. Many competing companies aren’t willing to wait three to six months – which is why these clauses should be contested.
  2. Requiring that the employee agree that in the event of any dispute, the laws of a non-California state should apply – such as the laws of the state where the employer first incorporated or has its headquarters. This law also should be challenged by the employee.

Santa Clara employees should review any effort by an employer to restrict where they can work- if the employee wants to leave the employer for a different job. Applicants should consult with experienced employee rights lawyers if they are being told to sign a contract that restricts their ability to move if the job doesn’t work out. For help with all employee rights issues, call the Santa Clara law offices of Stephen Danz & Associates. Our lawyers have been fighting for employees for 40 years. For help now, call us at (877)789-9707 or complete our contact form to make an appointment. Se Habla Espanol.