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Joseph
Joseph, Lawyer
Category: California Employment Law
Satisfied Customers: 4986
Experience:  Extensive experience representing employees and management
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In California, are non-compete clauses enforceable, and are

Customer Question

In California, are non-compete clauses enforceable, and are the following fair?

"Convenant Not To Compete"
During the term of the Agreement, Provider shall not engage or participate in any business that is in competition in any manner with the business of Corporation. This includes the use or dissemination of any proprietary information or materials ( as defined under California Civil Code Sect 3426.1)

During the term of this Agreement, and for a period of two years after termination of the Agreement, Provider agrees not to practice dentistry within a three mile radius of the Corporations' dental office in which he/she has provided treatment during the term of this agreement. A
Submitted: 1 year ago.
Category: California Employment Law
Expert:  Joseph replied 1 year ago.
Hello and welcome to JustAnswer.

I'm Joseph, and I'll be happy to assist you with your question today.

My goal is to provide you with excellent service today.

Under California Business and Professions Code Section 16600, non-compete agreements between employers and employees are completely invalid and unenforceable in the state of California, so the non-compete against you would be completely void and unenforceable.

Business and Professions Code 16600, especially applies to the provision prevents you from practicing dentistry within any radius of the corporation's dental office after termination of your agreement.

However, it is illegal for you to disclose your employer's proprietary information, during or after employment. In order for this to apply the information would actually need to constitute trade secrets, meaning that it is not information that is otherwise available and that your employer has taken reasonable steps to ensure its secrecy.

Your employer is also within its rights to restrict your practices during the scope of employment. Although it wouldn't be able to sue you for any amount, if you were to do work for a competitor, your employer would be within its rights to terminate you for 'good cause' for violating your employment contract with your employer.

Since my goal is to provide you with excellent service today, please let me know if you have any follow up or clarifying questions regarding my answer above.

Thanks and best of luck!
Joseph, Lawyer
Satisfied Customers: 4986
Experience: Extensive experience representing employees and management
Joseph and other California Employment Law Specialists are ready to help you
Customer: replied 1 year ago.

Thank you so much!



Just to clarify, did you mean by the following that, the employer cannot prevent me from practicing even next door" after termination?


 


Also, what's the typical period of notice for termination? 60 days or 90 days?


 


"Business and Professions Code 16600, especially applies to the provision prevents you from practicing dentistry within any radius of the corporation's dental office after termination of your agreement.

Expert:  Joseph replied 1 year ago.
Hello Rita,

Yes, your employer cannot even restrict you from working right next door to the employer after the termination of your contract. You could open up your own practice right next door after the termination of the contract without being sued.

There's no typical period of notice for termination, since most employees are at-will and can be terminated at any time for any reason with or without any prior notice.

That said, in employment contracts, 60 days is definitely more common than 90 days for notice of termination, although 30 days is probably even more common than 60.

Joseph, Lawyer
Satisfied Customers: 4986
Experience: Extensive experience representing employees and management
Joseph and other California Employment Law Specialists are ready to help you
Customer: replied 1 year ago.

So I should feel comfortable signing the contract even with those non-compete clauses in?


 


"There's no typical period of notice for termination, since most employees are at-will and can be terminated at any time for any reason with or without any prior notice."


 


Does the above apply to independent contractors too? Ie, if I decide to quit, what remedies do they have? What would I lose in court?


 


Many thanks!!

Expert:  Joseph replied 1 year ago.
Hello Rita,

Yes, since the non-compete clause is invalid and unenforceable in California, you should feel comfortable signing the agreement despite the non-compete clause in it.

I have a few more questions for you before I can answer your question regarding a potential breach of your independent contractor agreement.

Do you have a certain notice period that is in the contract for how long your employer has to notify you and you would have to notify your employer prior to breaching the contract?

Is there any 'liquidated' damages provision in the contract that states that you or your employer would be liable for a certain amount if you or the employer elects to terminate the contract without sufficient notice?
Customer: replied 1 year ago.

Thank you!


 


7.01 Term: the term of this agreement shall continue for 12 months unless terminated by either party.


 


7.02 Termination by Provider: IN the event Provider elects to terminate this Agreement, Provider shall give Corporation at least ninety (90) days written notice of Provider's intent to terminate. Provider acknowledges that the (90) days would allow the Corporation an opportunity to obtain a replacement for Provider, so as to allow for a smooth transition of patient care on a continuing basis.


 


7.03 Termination by Corporation: It is agreed that Corporation may terminate this agreement by delivery of written notice to Provider upon 60 days written notice.


 


I think 90 days is too long, and asked for fairness that both be 60 days, but the manager did not agree.


 


I did not see any liquidated damages provision at all. Should I include one?

Expert:  Joseph replied 1 year ago.
The written notice provisions should be equal in length. In fact, this provision could potentially be found to be unconscionable due to the disparity in the notice requirements for the employee and the employer.

A liquidated damages provision would only state a certain amount of damages for breach, so damages wouldn't have to be proven by evidence. In your situation, having to give 90 days of notice would mean that if you breach, your employer could potentially sue you for businesses losses caused by you terminating the agreement without notice.

However, the employer does have an obligation to mitigate damages, so it would have to try to find a replacement for you ASAP. However, if they wind up finding a replacement and have to pay him or her more since they need someone to fill the position, then you would potentially be liable for the difference in pay that that person is receiving and that you're receiving.

I would definitely suggest that you push for 60 days instead of 90. (Or that at least, they agree to give you 90 days notice before terminating the agreement with you).

Also, since I've failed to mention it until now, it would definitely be worth your while to see if you are correctly being classified as an independent contractor and not an employee.

You can look at the factors here:

http://www.dir.ca.gov/dlse/faq_independentcontractor.htm

Again, regardless of what you sign, if you are factually an employee, you will be entitled to benefits (including overtime, workers' compensation, health benefits, unemployment, disability, etc.) and may wind up having a substantial wage claim against your employer if you are not paid overtime (since independent contractors are also not entitled to overtime).

For instance, if your hours are set by your employer and you work at his or her establishment, you would most likely be an employee, not an independent contractor.

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