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It might be time to review employment agreements

As employers in California, businesses get access to some of the best professional talent in the nation. Of course, there are reasons that the state attracts so many creative, skilled and productive workers — and not all of these reasons favor corporations. 

It is more than the weather and the employment options. California corporate law also traditionally favors employees in many ways. A recent court decision could expand that trend. 

Inventions after employment

Many employment lawyers are watching an ongoing case about patent rights after employment. It involves a type of non-compete agreement. The basis of the case was a contract: A creative leader signed terms that limited his ability to invent in his field after leaving the company. 

After leaving, he nevertheless went on to patent several inventions. His former company filed suit. 

The recent development in this case happened in the United States District Court for the Southern District of California, which makes it a federal decision. The district court reversed the findings at the lower, trial level, supporting the employee’s claim that the contract violated state law. 

The spirit of the law

Contracts can adapt the law and add specifics. They cannot rewrite the law or circumvent it. 

There are several issues at stake in this case, but the main one is whether the contract inhibits the inventor’s professional potential. The relevant California code on restraining contracts states that agreements are void if they limit people from engaging in lawful business. Of course, there are many exceptions, but the appeals court decided that none apply to this situation. 

Do businesses have to review their employment contracts because of this decision? Potentially, but keeping up with these types of changes could also be good practice in general. 


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