As multinational companies compete for highly skilled employees around the world, they are often confronted with a deceptively simple question: Do they impose a noncompetition agreement on their employees?
This article is part one of a two-part article addressing how multinational companies can use a noncompetition agreement on their highly skilled employees to protect their
Going into 2020, employers should be mindful of several new state laws aimed at limiting the enforceability of noncompete agreements against low-wage employees. Crucially, while protecting low-wage worker job mobility is the key aspect of these new state laws, each has its own unique nuances and one-off requirements, further complicating employer efforts to protect their
California courts mostly take a no prisoners approach to Business and Professions Code section 16600, the statute prohibiting illegal restraints on trade. Courts broadly interpret Section 16600, which states that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void,” to invalidate most post-employment non-competes and customer non-solicits, including covenants preventing former employees or their new employers from “hiring” employees of a former employer (so-called “no hire agreements”). But Section 16600 does not bar all post-employment covenants–just those that “restrain” trade.
As employment lawyers based in California are well aware that post-employment non-compete agreements are generally void as a matter of law in this state. Further, there is precedent for awarding punitive damages and disgorgement of profits where employers have knowingly required employees to enter into invalid agreements. Also, the DOL has actively pursued California-based companies engaging in anti-competitive practices when it comes to talent.
Against that backdrop, however, employers need not “throw in the towel” completely when it comes to post-termination restrictive covenants as there are a few narrow scenarios that allow for enforceable post-termination non-competes in California in the right circumstances, and a potential new take on an old strategy to consider.Continue Reading Can Employers Use The California Labor Code To Protect Company Assets?
Continue Reading Top 10 New Year’s Resolutions For California-Based Multinational Employers
