Non-Competitive Agreements

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Non-compete agreements are a great tool for employers. They prohibit a former employee from working in a related field of business for a specified time and within a particular geographic area. This of course prevents former employees from working for, and benefiting the business of, a competitor.

Unfortunately for employers, non-competition agreements have been found to be unenforceable in the State of California and restricted in some other states. In August of 2008, in a unanimous decision, the State Supreme Court ruled that non-compete clauses are unenforceable in California in most circumstances (there are exceptions in connection with the sale of a business and the dissolution of a partnership).

The court stated that this finding "advances …show more content…
By addressing these issues at hire. A good alternative to the non-compete agreement in California and some other states with restrictions on noncompetes is a narrowly defined non-solicitation agreement and employee confidentiality agreement restricting former employees' use of trade secrets in soliciting company customers.

After implementation of a properly drafted non-solicitation agreement, the employee may not solicit your customers while they are still with your company. After they leave, they are restricted from soliciting your customers using trade secrets of your company, as defined by state law. Note that California courts have held that a non-solicitation agreement that is not limited to protecting trade secrets is to be treated the same as a non-compete agreement and is therefore unenforceable. The enforceability of non-solicitation agreements thus depends on whether they are tied to protecting trade secrets or not.

A non-solicitation agreement is an excellent alternative to a non-compete agreement for protecting the interests of business owners in California and some other states. They can help the business owner safeguard their business customers while not excessively restricting an employee's right-to-work in their chosen
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