August 10, 2021
California has many large and well-known companies in the United States, which brings a thriving economy that is an advantage for both companies and employees. Because of this, our state has developed laws that include significant incentives for business owners and protections for workers. That is why specific procedures work differently in California than in other states. Employment contracts are an example. The rules regarding contracts and the types of terms an employer can include in them are different in California.
Can employers include non-compete agreements in a worker’s contract?
Non-compete agreements tend to benefit companies and not individual workers. The broader the terms of a non-compete agreement and the longer it remains in effect, the greater the detrimental impact the agreement will have on the employee. That is why California courts do not support non-compete agreements, as they could affect a worker’s ability to support himself. Many people also believe that non-compete agreements stifle innovation.
Some companies include non-compete clauses in their contract because the employer is in multiple states and uses the same contract. However, employers will not be able to make the courts enforce a non-compete agreement if an employee leaves the company and starts his or her own business or seeks a new position elsewhere. Non-compete agreements are not illegal. However, companies will most likely not be able to enforce them.
When could a non-compete contract be upheld in court?
Employers who hire people in California do not have the right to dictate what workers must do after leaving that company. However, an employer may have the right to demand certain concessions while workers are still on the payroll.
While the courts will not assist in post-termination enforcement of a non-compete agreement, a court may allow a company to take action against someone who works for a competitor or starts a business in the same industry while still being a direct employee of the company. In most other cases, a non-compete agreement will not stand in court or affect an employee’s future options in California.
