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California’s unique take on non-compete agreements

California frequently leads trends in this country, including when it comes to labor laws. These progressive policies often provide benefits to workers in many areas.

In the sphere of noncompete agreements, California has taken a position that favors the right of former employees to earn a living once they move on.

The basics of the California position

The Society for Human Resource Management identifies California as “one of the toughest states” for companies to enforce a non-compete agreement. In General, if a contract attempts to restrain a former worker from practicing his or her profession, the contract is not legal in California.

In its most general form, a noncompete agreement attempts to prevent a professional or trade worker from accepting employment, in the same geographic area, for a duration of time, for a competitor. It is similar to a nonsolicitation agreement, which restricts a former employee from seeking business with former clients. California Business and Professions Code Section 16600 prohibits both types of contracts.

Nondisclosure agreements, which deal with confidential company information, and antipiracy and anti-raiding agreements, have better legal standing. In some circumstances though, these contracts fail to meet California’s standards and courts could rule against them.

The exceptions to the California position

The state sometimes allows for the enforcement of certain types of restrictive contracts. These often involve the finer elements of labor contracts and agreements and have the potential to change with new court cases. It is in the best interest of California employers and employees to pay close attention when entering into any non-compete agreements or other similar contracts.

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