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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
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Experience:  Significant experience in all areas of employment law.
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Hello, Ive been driving, doing courier work as an independent

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Hello,
I've been driving, doing courier work as an independent contractor for one company since 2002. I'm quittng in August to trade stocks full time but I got with a hospital I'm doing a route for who is a customer of this company and I mentioned I would be willing to continue to work for them after I quit the company and do it for about half what their being charged now.
Anyway, I just came across a copy of what is called a "confidential agreement" which I'm sure I signed a copy of when I got hired which stipulates among other things that for a period of 2 years following the termination of employment, no independent contractor "shall call on, solicit, take away, or attempt to call on, solicit or take away any of the customers" of this company that he or she became acquainted during the utilization of his or her services with this company.

I already mentioned, only verbally, nothing in writing that I would be willing to do it after I leave. They sounded very interested.
My question is, is this stipulation legally valid and enforceable? Can they control me for 2 years after I leave the company? Nothing will be in writing until after I leave.
Submitted: 1 year ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 1 year ago.
Good evening and thank you for entrusting me to answer your question. I will do everything I can to assist you.

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 customers 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 generally involve instances where a business owner sells their entire business and agrees not to start up a new operation that directly competes. 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. Thus, such employee could freely solicit former customers without fear of a legal judgment being obtained against them, notwithstanding that an agremenet providing to the contrary was signed.

Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.

If you do not require any further assistance, please be so kind as to provide a positive rating of my service so that I may receive credit for assisting you. Very best wishes to you and thank you so much for coming to Just Answer.
Customer: replied 1 year ago.

Thank you so much.


 


Pertaining to your reply in part which says,Thus, such employee could freely solicit former customers without fear of a legal judgment being obtained against them, notwithstanding that an agremenet providing to the contrary was signed.


I did sign the stipulation back when I got hired and I am not an employee but an independent contractor.


So would you say these 2 points don't matter in your opinion?


 

Expert:  Patrick, Esq. replied 1 year ago.

Thank you very much for your reply.

Yes, my answer applies equally to independent contractors and regardless of when the agreement was signed.

If I can provide you with any further clarification or assistance, please do not hesitate to let me know. If I have answered your question, I would be very grateful for a positive rating of my service so that I may receive credit for assisting you.

Kindest regards XXXXX XXXXX best wishes to you moving forward.

Customer: replied 1 year ago.

Thank you again,


 


One last question then I will be happy to rate you.


My actions are to go forward with my plans based on your answer.


What type of certainty can you offer that your advice is 100% accurate & I don't have to worry about litigation and being found in the wrong?

Expert:  Patrick, Esq. replied 1 year ago.
Thank you again.

The law in California is extremely well settled that non-competes are invalid and that a restriction on the ability to deal with former customers falls within the scope of unenforceable non-competes.

The following passage from the Edwards case I cited above encapsulates the CA Supreme Court's position on this issue:

"The second challenged clause prohibited Edwards, for a year after termination, from `soliciting,' defined by the agreement as providing professional services to any client of Andersen's Los Angeles office." The agreement restricted Edwards from performing work for Andersen's Los Angeles clients and therefore restricted his ability to practice his accounting profession. The noncompetition agreement that Edwards was required to sign before commencing employment with Andersen was therefore invalid because it restrained his ability to practice his profession."

I believe that makes the Court's position very clear on the enforceability of agreements prohibiting contact with former customers.

With regard to being sued, there is never a guarantee it won't happen because people file frivolous lawsuits all the time. There is nothing stopping your former employer from suing, though you may be able to recover costs if you can prove that their action was frivolous (and you'd have a good case that it was).

The only circumstance in which your former employer would be actually precluded from suing would be if you pre-emptively obtained a "declaratory judgment," which is essentiallty a judgment from the court on the enforceability of your non-compete in advance of any dispute actually materializing. However, declaratory judgment can be very expensive to obtain (several hundred dollars just to file, plus attorney fees), and so would probably not be worth the cost under the circumstances.

I hope this clarifies. Have a very pleasant evening.
Patrick, Esq., Lawyer
Satisfied Customers: 7532
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you

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Patrick, Esq.
Patrick, Esq.
California Employment Lawyer
7532 Satisfied Customers
Significant experience in all areas of employment law.