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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
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Four years ago I signed an independent contractor contract

Resolved Question:

Four years ago I signed an independent contractor contract that had a non-compete agreement in it. At the end of the agreement was the following phrase, "Upon termination of contract with SOS, contractor may not work with current or former clients of SOS independently for twelve months."

I understand that non-compete agreements in California are not enforceable. But I'm wondering if the statement above is also non-enforceable, as I have just terminated my contract, and have had some requests from clients to continue working with me. My former employer just found out about one of these clients, and is asking me to pay her 20% of the income I receive from this client, as a result of my initial agreement.

My questions are: am I beholden to the non-compete agreement? Am I doing anything illegal by continuing to see clients who I initially me through the agency?

Thanks for your help,
Gretchen
Submitted: 2 years ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 2 years ago.
Hello and thank you for entrusting me to assist you. My goal is to answer your question completely and thoroughly and to provide excellent service.

Generally, the sort of agreement you have described would be unenforceable pursuant to Business and Professions Code section 16600, which states: "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."

Quite simply, if the agreement prohibits an employee from "engaging" in that same industry following termintion of employment in any manner, it falls within this definition. Restrain on the ability to do business with former clients clearly falls within this definition, and numerous California cases have expressly held so. See here for a recent case in which the court invalidated an 18-month non-solicitation restriction on a former employee of a tax services company that prohibited the employee from providing services to any of the former employer's clients for a year: http://scholar.google.com/scholar_case?case=3664324957067638309&hl=en&as_sdt=2&as_vis=1&oi=scholarr

There are a few VERY narrow exceptions to the general rule that restraints on competition are unenforceable. The exceptions are a bit complex but include the following: (1) If an owner is selling the goodwill in their business (goodwill is the reputation and name of the business); (2) When there is a dissolution or disassociation of a partnership or (3) Where there is a dissolution of a limited liability company. There is also a limited exception for "trade secrets."

However, a general prohibition on doing business with former clients would almost certainly be unenforceable. Accordingly, an employee under the circumstances you describe would not typically be violating an enforceable contract by dealing with former clients.

I sincerely XXXXX XXXXX this information helps you and I wish you the best.

If you do not have any further concerns, I would be very grateful if you would give my answer a positive rating and click submit, as this is the only way I will receive credit for assisting you. If you have any additional concerns that you would like me to address, please feel free to let me know by hitting the REPLY or CONTINUE CONVERSATION button and I will be more than happy to continue assisting you.

Finally, please bear in mind that none of the above constitutes legal advice nor is any attorney client relationship created between us.

Thank you and very kindest regards.
Patrick, Esq., Lawyer
Satisfied Customers: 7382
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you
Customer: replied 2 years ago.

Thank you! I really appreciate your advice, and the case that you sent me to is very interesting. I now know the law, and so my next step is to decide what what my personal integrity tells me to do in regards XXXXX XXXXX former clients.


 


Take good care,


Gretchen

Expert:  Patrick, Esq. replied 2 years ago.
Gretchen,

I am so glad that you found my answer helpful and I wish you the very best moving forward.

Please kindly remember to rate my answer before leaving, as this is the only way I will receive credit for assisting you.

Have a great Labor Day weekend!

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Patrick, Esq.
Patrick, Esq.
California Employment Lawyer
7382 Satisfied Customers
Significant experience in all areas of employment law.