California Non-Compete and Restrictive Covenant Laws
Pleasanton employment lawyers enhance protections while limiting risk
As an employer in California, you must balance your need to protect proprietary information with the state’s extensive protection of employee rights. At Garcia & Gurney, A Law Corporation in Pleasanton, we offer practical guidance on non-competes and other restrictive covenants. The risks to your business may be too great not to use restrictive covenants, but you also face substantial penalties for noncompliance with state law. Our knowledgeable lawyers help you balance these two pressing concerns.
Defining non-competes, non-solicitation clauses and nondisclosure agreements
A non-compete clauses is meant to prevent a former employee from working for or starting a competing business for a specified period and geographic area. Non-solicitation clauses generally bar former employees from soliciting an employer’s customers or employees. Nondisclosure agreements (NDAs) restrict release of confidential information. Employers traditionally use these tools to protect customer relationships, retain trained staff and shield proprietary information and trade secrets.
Limits on restrictive covenants
California Business and Professions Code §16600 provides that, except in narrow statutory exceptions, “every contract by which anyone is restrained from engaging in a lawful profession, trade or business … is to that extent void.” This means that with limited statutory exceptions employment non-competes are generally void and unenforceable in California.
California has recently reinforced its prohibition on non-competes. New statutory provisions required employers to provide individualized written notice by February 14, 2024, that non-compete provisions are void. These changes also make attempting to enforce an invalid non-compete a civil violation.
California courts have struck down many broad non-solicitation provisions that operate like non-competes. By contrast, courts routinely enforce narrowly tailored NDAs that protect bona fide trade secrets without restricting job mobility. Our employment lawyers draft NDAs to define protected information, limit duration and avoid blanket restraints on future employment.
Practical guidance for employers seeking enforceable protections
If your California company is long-established, you might be relying on outdated restrictive covenants in employment contracts. To strengthen your company’s legal protections, our team can:
- Audit your agreements to identify tenuous provisions
- Scrutinize provisions for out-of-state and remote workers
- Remove or rewrite non-competes, replacing them with narrowly tailored NDAs
We can also craft garden-leave arrangements whereby an employee is required to stay away from work but remains on the payroll
Helping companies protect trade secrets
We can help your company introduce strong trade-secret protection policies, relying on the federal Uniform Trade Secrets Act (UTSA) and the California Uniform Trade Secrets Act (CUTSA), codified in Cal. Civil Code §§ 3426-3426.11.
CUTSA gives employers broad protection against an employee’s theft or misappropriation of trade secrets. The law explicitly states that an employer owns all trade secrets, even those an employee creates within the scope of employment. To invoke CUTSA protection, employers must qualify the proprietary information they wish to protect as a trade secret. This requires two elements of proof:
- The information derives value from the fact that it is secret
- The company has taken reasonable steps to maintain the information’s secrecy
CUTSA enables businesses to sue a rival company that uses a trade secret without authorization. In such cases, the plaintiffs only need show that the defendant had reason to know that the information might be a trade secret. CUTSA provides for injunctive relief, barring further use of the information and damages for misappropriation, such as lost profits.
Common scenarios we handle in Pleasanton and the Bay Area
At Garcia & Gurney, we regularly advise in such matters as legacy agreements for acquired companies, remote employees who cross state lines, executive separation agreements and customer-facing sales roles where non-solicit language is common. We help employers draft compliant NDAs and narrowly tailored restrictive provisions that protect legitimate business interests.
Contact our Pleasanton employment attorneys to discuss contract covenants
Garcia & Gurney, A Law Corporation in Pleasanton helps employers protect proprietary information with effective, compliant contract covenants. Call 925-468-0400 or contact us online to schedule an appointment.
