Law Offices of Louis Spitters

Court of Appeals rejects noncompete agreement

A recent California case illustrates the state's wary attitude towards noncompete agreements. An appeals court threw out a noncompete agreement in a lawsuit brought by an employer.

Employers often stipulate a noncompete agreement as part of an employment contract. They are common in positions that involve a lot of specialized knowledge that would be valuable to competitors. Their rationale is that if an employee leaves, the employer doesn't want a competitor to benefit from skills or knowledge that they helped that employee develop.

However, noncompete agreements can unfairly limit an employee's future job prospects. Part of career development is developing and honing skills that will advance an employee's position and noncompetes can prevent them from moving on to that next important step.

In this case, an employee sold his interest in a business and signed a noncompete agreement vowing not to solicit customers or potential customers for a year after leaving his employer. He worked there for three years but eventually left. He went to work for another company six months later and was sued for breaching the noncompete.

The court ruled in the employee's favor, holding that the contract was so restrictive that it interfered with his ability to make a living. If the noncompete had been more narrowly tailored and explicit it may have had a better chance of holding up.

California courts are known across the country for being less than enthusiastic about noncompete agreements. The state's judges are loathe to enforce them so this ruling is not surprising.

If you are involved in a dispute over a noncompete agreement or other employment contract, your job or future livelihood could be at stake. It is important to speak with a qualified employment law attorney who can work with you, review any contractual and legal issues and work to protect your rights and your career.

Source: Business Management Daily, "Strict noncompete agreement? Don't expect it to stick," Dec. 7, 2012

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