Non-Compete Agreements

Non-compete agreements seem to be one of those documents you must sign when starting with a new employer. They throw it in with the rest of the benefits and NDA paperwork you are expected to sign when starting out on your very exciting first day. It’s usually buried near the bottom of the pile when psychologically, you’re in the “I’m sure it’s all good, I’ll just sign everything” mood.

So what is a non-compete agreement? A non-compete clause is a term used in contract law under which one party (the employee) agrees to not pursue a similar profession or trade in competition against another party (the employer).

In less legalese, this usually comes in the form of you not being allowed to go to work for a “competitor” for some period of time after leaving the company. 6 months is fairly typical.

However, in California the Business and Professions Code make these agreements unenforcable and non-binding agreements.

BUSINESS AND PROFESSIONS CODE SECTION 16600-16607
16600. Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

Even though non-compete clauses or agreements may be unlawful and unenforceable in California, many employers still make employees sign them because they are willing to gamble that:

  1. Most employees will not question the validity of the agreement.
  2. Most employees will assume non-compete restrictions are valid.
  3. Most employees will not challenge or question the employer about the agreement.

At the end of the day, the employer or business will reap the benefits of an illegal non-compete agreement because employees will assume it’s valid and abide by it.

This is analogous to the homeowner who posts a “Beware of Dog” sign, but does not have a dog. Or the business owner who displays a sign that warns “Premises Alarmed” when in fact there are no alarms. In both examples, the owners keep burglars and trespassers away for the price of a few plastic signs. Employers benefit in the same manner. The illegal non-compete agreement is equivalent to a cheap plastic sign. While ultimately unenforceable, the employer benefits by giving it to employees.

California’s law gives its workers “the right to work” and prevents employers from preventing you to work for yourself or anyone else to sustain your income. While this is a very good thing for employees, it is not a free ticket to be an idiot. Regardless of how good a person you are, and no matter how big a jerk your ex-employer is, you cannot steal company property or information.

If you have stolen company information to hold hostage during severance or employment departure negotiations, or if you misappropriated trade secrets in retaliation, or took the material to set up your own shop, you are a criminal in the eyes of the law.

In summary, you can work for anyone you choose and your employer can’t stop you. But don’t be a moron and share trade secrets or take IP that belongs to your previous employer with anyone else.

I am not a lawyer by any means, nor do I play one on a television show, so don’t base your legal defense on this posting.

About the author

Terry Blanchard

I'm the Vice President of Engineering at Readdle, ex-Apple, design evangelist, drummer, and gadget junkie extraordinaire.

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