California Employment Law

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California Employment Law
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Hi Im based in California and resigned from my job (ERP/IT

Hi I'm based in California...
Hi I'm based in California and resigned from my job (ERP/IT Staffing) and they sent me an NDA I signed which says that for 12 months I cannot contact any clients I dealt with or the company deals with even if I don't know about it and I can't contact any consultants I've worked with or that the company knows even though the company knows 40,000 + consultants. IT says I can't work with any vendors that company has or any service providers either... very broad and it says that if deemed un-enforecable the company will re-write it with the language until it is enforceable... Does this hold up in California and is this Legal?
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Answered in 21 minutes by:
10/5/2012
Patrick, Esq.
Category: California Employment Law
Satisfied Customers: 13,396
Experience: Significant experience in all areas of employment law.
Verified
Hello and thank you for entrusting me to answer your question.

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. Thus, such employee could freely solicit former clients without fear of a legal judgment being obtained against them.

Your employer can try to "re-write" the agreement as much as they want, but as long as it restrains you from engaging in your trade and does not fall within one fo the narrowly tailored exceptions discussed above, it will continue to be unenforceable.

If you are particularly concerned about being sued, you can request "declaratory relief" from the court. Decrlaratory relief is a sort of pre-emptive judgment, wherein the court decides an issue that will iminently result in a lawsuit before the actual lawsuit is filed against you. As noted, though, an employee who signs an agreement constituting a restraint on trade, as a prohibition from dealing with a specific client would clearly constitute, need not abide by the agreement as it is void in the state of California.

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.
Category: California Employment Law
Satisfied Customers: 13,396
Experience: Significant experience in all areas of employment law.
Verified
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Customer reply replied 5 years ago

Would I be protected only in california or could they sue me in another state since they are headquartered in Delware with a principle place of business in San Francisco?

Customer reply replied 5 years ago

more detail on if they can prosecute me in another state since they are a delaware corp with a principle place of business in San Francisco

Thank you for your followup inquiry. Are you located in the state of California and is that the state you were in when you signed the agreement?

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Customer reply replied 5 years ago

I'm in california and california is the state where i signed the agreement

Thanks for clarifying. If the agreement was signed in the state of California and the work was carried out in the state of California, then there is no doubt that the laws of California (which prohibit non-compete agreements) would govern, regardless of the location of your employer.

Please let me know if you require any further clarification and I will be very happy to provide it.

Best wishes moving forward.
Ask Your Own California Employment Law Question
Customer reply replied 5 years ago

thanks

No problem. Best of luck to you.
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Patrick, Esq.
Patrick, Esq.
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Category: California Employment Law
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