Question: I have worked here for a national company for almost two decades. A competing business recently expressed an interest in what I can bring to the job at their company. They are also offering to pay me more in salary, and the benefits appear better.
I am concerned that my current employer may take some action against me. I am not sure what I may have signed in my years of working for them, but I am concerned because they have a reputation for being quite litigious. Should I make the move? What are my rights if I do?
Answer: Given that you are leaving a job in California for another job here in this state, you should be in luck. You need to first gather any agreements you may have entered into with your employer. If there is a non-compete clause in the employment agreement, know that your employer must comply with California law and cannot prevent you from pursuing a new job opportunity by attempting to enforce such a clause.
Many other states allow an employer to insert a non-compete clause into their employment contract and enforce the provision in court, so long as it is “reasonable.” Although non-compete clauses traditionally were applied to high-level executives, there has been a rise in the use of non-compete clauses for all types of workers, including mid- and low-level employees.
On one hand, the non-compete clause protects an employer’s investment in its workforce. Proponents of non-compete clauses note that courts will enforce only “reasonable” clauses, claiming that any employer overreach will be thrown out. Opponents of non-compete clauses note that they stifle competition instead of encouraging fair play.
While only “reasonable” clauses are enforced, employees are hesitant to invite a lawsuit for a move that puts only a few more dollars in their pocket. Moreover, they argue that these clauses represent a broad shift by employers to claim ownership not only over an employee’s work but also over an employee’s work experience.
Our state Legislature has taken a hostile position to non-compete clauses. California does not enforce them because it finds that they do not promote open competition and protect employee mobility. In fact, under state law, employers can be held liable for firing or refusing to hire an employee for not agreeing to sign a non-compete agreement, and an employer who seeks to enforce a non-compete against a former employee can be held liable for interfering with the employee’s contractual relations with the new employer.
So California’s protective stance on employee mobility should allay your concerns regarding action from your employer, but you should note that this doesn’t mean that there are no limits in California.
There are three exceptions to the general prohibition on non-compete clauses. A non-compete clause may be enforceable against the seller of a business, a former business partner or a former member of a limited liability company. Generally speaking, a person cannot sell a business and then open up shop around the corner.
But these particular exceptions may even come into play if an employee sells shares of stock in the business pursuant to an agreement. So if this situation arises, you will want to carefully review any agreements and seek a lawyer’s help.
In addition, an employer may lawfully prohibit a former employee from using “trade secrets.” Trade secrets can include many different types of intellectual property. If you signed any non-disclosure agreements or agreements dealing with “confidential information,” you will need to carefully review them. Note that even a customer list can be considered a trade secret.
If the new company’s interest in you is more about the customer list than it is in you, you may want to reconsider the offer.
Assuming that none of the exceptions apply, you should take a deep breath of that California air and jump into your new job, knowing that this state’s law protects your ability to move.
Preston Morgan is a partner at Kopper, Morgan & Dietrich, a Davis law firm providing family law, estate planning and trust litigation representation. His column is published every other week in the Davis Enterprise. To pose a question to Preston Morgan, contact him at https://kopperlaw.com.
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