Good morning Katherine,
Thank you for the additional information.
We have an unusual situation here, in that CA has a law which strictly prohibits non-compete agreements with rare exception. And you, as an employee do not fall into an exception. The law is codified in California Business & Professions Code section 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."
Other states do not have such protections for employees and NJ is one of those states. Here is where it gets interesting---and a bit confusing. When you, a resident of the state of CA with a non-compete agreement from an employer outside the state take a job in California for a California employer, while the CA courts will not enforce the agreement if you are sued in CA by the employer for an alleged breach of the agreement, there is the possibility that if you were sued in NJ for the same action that is legal for you to take in CA, that the NJ court might find that you breached the contract.
Now if you are a CA resident, and the job is in CA, and the only tie there is to NJ is that the employer is there---unless the contract you are being asked to sign specifically holds that any suit arising out of this contract will be subject to the laws of NJ, then you are probably in the clear and safe from a suit in NJ.
So, while it is unlikely that you could be personally sued for violating the non-compete agreement in CA, there is that possibility that you could be drawn into a suit in NJ---and that is just something that is an unknown at this point.
Here is an excellent article on just this dilemma that is faces by CA employers and employees when dealing with out of state employment contracts which include non-compete agreements:
As for the issue of whether you can become a full time employee for VMware, the contract between your employer in NJ and VMware almost certainly provides that VMware may buy you out from the employer by making a payment for you to be released from your contract with the employer. This is pretty standard in the industry.
However, there is also likely a clause in the contract between your employer and VMware that prohibits VMware from attempting to hire you without paying the release charges----and while this is essentially a similar non-compete agreement---between your employer and VMware not to hire you, because it is a contract between businesses, and does not involve any prohibition against what you may do---CA will enforce that agreement between the employer and VMware.
You can presume that the agreement with VMware contains preclusion from them hiring you for at least the 18 months that they are seeking to prevent you from seeking an independent hire with VMware. And so yes, that agreement, if it is as I suspect, would prevent VMware from hiring you during that 18 month period after you ceased working for them as a leased employee from the company in NJ.
I suspect that VMware is fully aware of their obligations when they contract with the NJ employer, as to what they must do, and pay, to be able to bring you in as their employee, and that if they say their intent is to move you into a staff position as soon as possible, that they are prepared to work an agreement out with your employer to release you. That is how these things work between the recruiter/employer and the companies who lease your services from the recruiter companies.
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I wish you the best in 2013,