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LawTalk
LawTalk, Attorney
Category: California Employment Law
Satisfied Customers: 36373
Experience:  I have 30 years of experience in the practice of law, including employment law and discrimination law.
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Hi, I have a small billing company, Im incorporated and I

Customer Question

Hi, I have a small billing company, I'm incorporated and I have an employee handbook in which for obvious reason is given to the employees for work reference and certain protocols that my company has. In the employees handbook there is a regulation of no competition and reads something like this:

Non-Competition Agreement
As an ongoing condition of employment, and for one year subsequent to separation, the employee agrees to the following conditions of employment:
Agreement Not to Compete for Accounts or Personnel or Accept Employment from Competitor

The employee agrees that during his/her employment with my company Billing Mgmt. Inc. and/or one (1) year after such employment ends, he/she will not, directly or indirectly, contact, solicit, divert, take away or attempt to contact, solicit, divert or take away any staff employee, temporary personnel, customer, account, business or goodwill from my company Mgmt. Inc., either for the employee’s own benefit some other person or entity, and will not aid or assist any other person or entity to engage in any such activities, nor will he/she directly or indirectly, contact or solicit employment from a client or customer.

For my clients I have this clause for Non-Solicitation

Company will not do any of the following:

(1) Call on, solicit, or take any of business referral sources.
(2) Will not solicit at any time hire away any of Company’s employees or independent contractors.

What happens if my employee doesn't want to sign the handbook knowledge page?
Can the employee go and get hire by my own client?

Please help me I am afraid that if my employee does not sing this handbook I don’t have any guaranties that he or she is going to soliciting employment from my clients?
Submitted: 3 years ago.
Category: California Employment Law
Expert:  LawTalk replied 3 years ago.
Good morning Edgar,

I'm Doug, and I'm sorry to hear of the confusion. My goal is to provide you with excellent service today. Because Marsha does not answer CA Employment Law questions, I will be able to assist you. I am a licensed CA attorney with nearly 3 decades of employment law experience.

California is a very progressive and liberal state in so much as employee rights are concerned---and becoming equally employer-unfriendly, unlike any other state in the country. I am sorry to have to tell you, but under CA employment/labor laws, non-compete agreements between an employer and their employees is illegal and unenforceable. Here is the language of the law as set forth in the CA Business and Professions Code:

§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.

CA law is even moving toward not enforcing employer=/employee agreements that prevent a departing employee from seeking to hire away from your company other employees. While a few CA judges do still enforce non-solicitation agreements---preventing the departing employee from soliciting your employees to leave and go elsewhere-----any attempt to prevent the departed employee (or their new company) from hiring one of your employees is unlawful and will not be enforced. And the reality is that most CA judges are no longer enforcing the anti-solicitation agreements either.

You may demand that your employees agree not to utilize trade secret information of the company, including client lists and contact information. Under California law, a trade secret is defined as information whose value is at least partly derived from being not generally known.

So long as any part of the agreement that you are asking to be signed by the employee is unlawful---because it seeks to restrict their employment rights contrary to the state law----then you may not discipline them for not signing such an agreement. And if you do discipline them, they would have a viable legal claim against your company.

Also, if they do resign from your company, the law allows them to go to a competing company of yours, and take a position as a new employee there. Here is a link to an article that discusses these CA laws:

http://www.lexology.com/library/detail.aspx?g=008a29af-6293-4136-8250-70cdf219f3f1



I wish you the best in 2013.

I understand that you may be disappointed by the Answer you received, as it was not particularly favorable to your situation. Had I been able to provide an Answer which might have given you a successful legal outcome, it would have been my pleasure to do so.

You may reply back to me using the Reply to Expert link if you have additional questions.

Kindly take a moment to rate my service to you based on the understanding of the law I provided. Please understand that I have no control over the how the law impacts your particular situation.

Thank you,

Doug
Customer: replied 3 years ago.
Thank you, I am very disappoited there should be a law that protects employers last favor to ask please dont post this question in your page thank you again
Edgar
Expert:  LawTalk replied 3 years ago.
Good morning Edgar,

Thank you for your kind words. They are appreciated. After you have had an opportunity to rate my service to you, I will ask that this question be closed for purposes of your confidentiality.

Please keep in mind that until you rate me highly for my service, I will not be credited with helping you.

Thanks again.

Have a great day,

Doug

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