How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Brandon M. Your Own Question

Brandon M.
Brandon M., Counselor at Law
Category: California Employment Law
Satisfied Customers: 12201
Experience:  California licensed attorney
Type Your California Employment Law Question Here...
Brandon M. is online now
A new question is answered every 9 seconds

I am the sole owner of a California S-corp formerly doing business

Customer Question

I am the sole owner of a California S-corp formerly doing business corp-to-corp with a small contracting company. My corp had ongoing payment issues with this contracting company and the owners lack of professionalism has caused him to lose the business with the client. To maintain the business with the client, the client would like me to sign on as an employee and get paid via W2. The contracting company is threatening legal action and I need a consultation to determine whether I can move forward with the client as a separate entity than my S corp. The corp-to-corp contract had non-compete/non-solicitation clauses, but my understanding is that those are unenforceable in CA and in turn would not be enforceable upon me as a individual versus a corporate entity.
Submitted: 2 years ago.
Category: California Employment Law
Expert:  Brandon M. replied 2 years ago.
Hello there:

Thank you for entrusting me with your question. Your understanding is essentially correct--non-compete agreements are essentially unenforceable in California. California. Business and Professions Code § 16600 provides 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."

In the California courts, there are a few exceptions.

First, an agreement to protect trade secrets can be enforced.

Second, Business & Professions Code § 16601 creates an exception permitting lawful non-compete agreements for company owners. It applies when a shareholder "sells" their stock to another for valuable consideration. You described yourself as the "sole owner", so would not seem to apply.

Third, Business & Professions Code § 16602 makes certain exceptions in the case of partnerships. Again... you are a sole owner.

There are also some exceptions where the employer and employee reside in different states and where the agreement is entered into outside the state; if either of those situations apply, let me know. Otherwise, the general rule remains intact--non-competes are unenforceable, regardless of whether it is in a corporate or individual capacity.


I understand that you may have follow-up questions. Let me know if further clarification is needed. Thank you.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • LawTalk's Avatar

    LawTalk

    Attorney

    Satisfied Customers:

    906
    I have 30 years of experience in the practice of law, including employment law and discrimination law.
< Last | Next >
  • http://ww2.justanswer.com/uploads/LA/LawTalk/2012-6-6_17379_LawTalk.64x64.JPG LawTalk's Avatar

    LawTalk

    Attorney

    Satisfied Customers:

    906
    I have 30 years of experience in the practice of law, including employment law and discrimination law.
  • http://ww2.justanswer.com/uploads/MU/multistatelaw/2011-11-27_173951_Tinaglamourshotworkglow102011.64x64.jpg Tina's Avatar

    Tina

    Attorney

    Satisfied Customers:

    816
    JD, 16 years experience & recognized by ABA for excellence in employment law.
  • http://ww2.justanswer.com/uploads/PI/PIExpert/2012-7-1_152453_Attorney.64x64.jpg Brandon, Esq.'s Avatar

    Brandon, Esq.

    Lawyer

    Satisfied Customers:

    314
    Has received a certificate of recognition from the California State Senate for his outstanding legal service.
  • http://ww2.justanswer.com/uploads/PH/phoenixrising119/2012-7-26_11214_043.64x64.jpg melissamesq's Avatar

    melissamesq

    Attorney

    Satisfied Customers:

    47
    Represent clients to maximum recovery in employment cases.
  • http://ww2.justanswer.com/uploads/IG/Iggy1001/2013-11-20_23344_JApic.64x64.jpg Joseph's Avatar

    Joseph

    Lawyer

    Satisfied Customers:

    2993
    Extensive experience representing employees and management
  • http://ww2.justanswer.com/uploads/JK/jkiani22/2013-11-18_15348_JacobKiani1copy2.64x64.jpg jkiani22's Avatar

    jkiani22

    Attorney

    Satisfied Customers:

    20
    Attorney
  • /img/opt/shirt.png Legal Counsel's Avatar

    Legal Counsel

    Lawyer

    Satisfied Customers:

    32
    California Licensed Attorney- 29 years- Wages, Hours, Overtime, Discrimination, Wrongful Termination.