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Can your business use non-compete agreements?

On Behalf of | May 11, 2023 | Business Litigation |

Some business owners use non-compete agreements when hiring members of their staff. These are most commonly included in employment agreements and other contracts signed by new employees at higher levels within the business structure, such as executives.

In general, a non-compete agreement says that when an employee leaves the company, they can’t start another business to compete directly with that company. They also cannot join a competing business in the same area and the same industry. This is clearly done to protect the business, but can you use this type of agreement in California?

It will not be upheld

The thing to remember about California law is that it does not enforce non-compete agreements. If you have put one in an employment contract and you try to take legal action because you believe that a former employee breached the contract, the court is going to side with the employee.

This can be confusing for both employers and employees because these clauses can be used in other states, and they are frequently. If you do business in multiple states or you just moved to California, it’s crucial to make sure you’re adhering to California law as necessary. You always need to know what state and local laws will support and what options you have.

Legal disputes

Confusion over these points can lead to disputes or disagreements about how employment contracts should be applied. It is important for all involved to understand what legal options they have. It’s also important to avoid disputes by considering the law carefully when initially drafting these contracts.