California Employment Law

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California Employment Law

I am considering taking a job with a indirect competitor of…

Customer Question
I am considering taking a...
I am considering taking a job with a indirect competitor of a freelancing client i had ended a relationship with back in may 2012. I am an interaction designer and worked with them on product strategy. The company is incorporated in Delaware corporation as an INC. However they Operated out of Maryland.

I will not be sharing any knowledge about there business, plans, or work that i did with this freelancing client to with the new job.

My understanding is that non-competes are not enforceable in California, even if the non compete was in another state and there for i would not have to get prior written Concent.

In addition, while i signed this document i never received a copy signed by a representative of the business.


Specific text from agreement in question:
"Non-Solicitation and Non-Competition. During the Term and for a period of eighteen (18) months after the Termination Date, Consultant shall not, except with the prior written consent of the Company:
directly or indirectly, individually or as part of or on behalf of any other person, employer or entity, hire or attempt to solicit for hire, any persons who are employed by the Company and with whom Consultant had contact while performing the Services, at any time until at least three (3) months after such person’s employment with the Company ends.
directly or indirectly, on behalf of Consultant or any other person, entity or employer, sell or otherwise provide, or solicit for the purposes of selling or otherwise providing, any service that is similar or related to those to be provided by the Company, in connection with Consultant’s providing Services under this Agreement, as of the Termination Date to any person or entity. This restriction will not apply to a service if at any point during the eighteen (18) month period after the Termination Date the Company stops providing any service that is similar or related.
directly or indirectly, own, manage, operate, control, be employed by, participate in, advise, consult or contract with, or be connected in any manner with the ownership, management, operation, or control of any business that develops, distributes, sells or markets any service that in each case is directly competitive, similar or related to those developed, distributed, sold or marketed by the Company in connection with Consultant’s providing Services under this Agreement, within the geographical area in which, as of the Termination Date, the Company is actively marketing or has made a significant investment in time and money to prepare to market its services within the ninety (90) day period after the Termination Date.
Unless otherwise specified in writing from the Company to Consultant, the Company’s engagement of Consultant shall be non-exclusive."

the full agreement:

is available if you need it. i just cant paste it into the box
Submitted: 4 years ago.Category: California Employment Law
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6/2/2013
California Employment Lawyer: Patrick, Esq., Lawyer replied 4 years ago
Patrick, Esq.
Category: California Employment Law
Satisfied Customers: 13,558
Experience: Significant experience in all areas of employment law.
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Hello and thank you for entrusting me to answer your question.

Can you please clarify for me whether you were working in Maryland when you signed the agreement, or were you in California at that time?

I very much look forward to helping you on this matter.
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Customer reply replied 4 years ago

I was working in NYC when I signed this Agreement.


 


 


 

California Employment Lawyer: Patrick, Esq., Lawyer replied 4 years ago
Izac,

Thank you for your reply. Does your contract contain a choice of law provision, meaning a provision which specifies what state's law will apply to interpretation of the agreement?
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Customer reply replied 4 years ago


  1. Choice of Law. Regardless of the choice of law provisions of the State of Maryland or any other jurisdiction, the parties agree that this Agreement shall otherwise be interpreted, enforced and governed by federal law and the laws of the State of Maryland.




is there a way for me to send you the pdf?

California Employment Lawyer: Patrick, Esq., Lawyer replied 4 years ago

Thank you again for your reply.

You are correct in noting that California law strongly disfavors non-compete agreements and finds them void in virtually all circumstances (See Bus. & Prof. Code 16600). However, the analysis here is more complex because your non-compete was signed in New York and specifically invokes the law of Maryland. The law in each of these two other states permits non-compete agreements provided they are reasonable in duration and geographic scope.

If your former employer attempted to sue for breach of contract in the State of California, or if you sued for "declaratory relief" (a preliminary court ruling that something is legal or illegal before an actual controversy materializes), the California court would certainly find in your favor. However, if your employer attempted to enforce a legal action for breach of contract in the state of Maryland or New York, those courts may follow the choice of law provision in your contract and find your non-compete unenforceable if it is reasonable in duration and geographic scope.

Whether any judgment could actually be enforced in the state of California (your former employer would have to apply to CA courts to give the judgment full faith and credit) is a different story, but this is murky legal water that you would want to avoid if at all possible.

Depending on your financial resources and the importance of ensuring this non-compete is unenforceable, an individual in your circumstance may wish to retain a local attorney to obtain declaratory relief in CA court (a finding that the non-compete is unenforceable) as well as an injunction (a court order) prohibiting your former employer from taking action in any out-of-state court. While a Maryland or New York court would likely apply the choice of law provision in your contract, they would typically recognize a CA injunction and refuse to rule upon the substance of your former employer's out-of-state breach of contract claim.

I realize that my answer is not as straight forward as you were hoping, but I do not want to mislead you into thinking that an out-of-state non-compete, signed out-of-state, and with a choice of law provision invoking the law of a foreign state, is automatically null and void if the employee travels to California. While that would be the result if a CA court ruled on the matter, a Maryland or New York court could conceivably reach an alternative conclusion and then, at the very least, you'd have to fight in CA court to prevent the judgment from being recognized in CA.

One last point I'll make is that, even if Maryland law were applied, that does not guarantee you'd be in breach, as non-competes are valid only if reasonable in duration and geographic scope. Attempting to enforce a non-compete across the country may very well not be reasonable in terms of geographic scope, and so as a worst case scenario, you could argue that the non-compete is invalid even according to Maryland law.

Again, this is a complicated situation with complicated answers and legal solutions. If you wanted to neutralize the threat of an adverse legal judgment, you would probably want to hire an attorney to obtain declaratory relief and an injunction in CA court. For attorney referrals, I like http://www.avvo.com

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.

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