Losing your job is never easy. After losing your job, you may have to scramble to find work, open your own business, or find some way of making money to survive.
Finding work or starting your own business may be even more difficult if your previous employer made you sign a non-solicitation agreement.
Like many workers, you may be scratching your head trying to figure out what a non-solicitation agreement is and if it’s even enforceable.
The Workplace Rights Law Group represents workers throughout Southern California. We have made it our mission to provide workers with quality legal representation.
Our team has put together this guide to help you understand what a non-solicitation agreement is and its implications.
What Is a Non-Solicitation Agreement?
A non-solicitation agreement is an agreement or provision that restricts your ability to solicit your previous employer’s customers or clients.
Some agreements may prohibit you from recruiting other employees and independent contractors you worked with to another business.
These types of restrictions prevent other companies, including the one you have started, from competing with your former employer.
These provisions are often limited to a certain amount of time and may also have a geographic restriction.
Non-solicitation agreements are in many employment contracts, but they may also be stand-alone contracts or part of a severance package. A typical non-solicitation agreement may look something like this:
Employee agrees that during the course of their employment with the Company and for a period of three (3) years thereafter, Employee shall not, directly or indirectly, contact or solicit any customer or client of the Company with the intent of doing business with such customer or client or inducing them to cease doing business with the Company.
As you can see, these clauses are often left vague and broad. This is done to make the clause as restrictive as possible. Another tool companies use to restrict employees is a non-compete agreement.
A non-compete agreement restricts employees from working in the same sector or a similar company as their former employer.
These clauses are even more restrictive than a non-solicitation agreement because they bar workers from the same business entirely.
Are Non-Solicitation Agreements Legal?
A non-solicitation agreement can be a huge burden on employees, but is it enforceable? California takes an aggressive stance on restricting competition.
California Business and Professions Code Section 16600 states that “…every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
This is effectively a prohibition on non-compete or non-solicitation agreements. Although companies have attempted to sidestep this prohibition, California courts have upheld it. Under current California law, non-solicitation agreements are unenforceable.
Unfortunately, this has not stopped California companies from using them. Many companies still ask employees to sign non-solicitation agreements.
Some companies may even refuse to hire an employee for not agreeing to non-solicitation language. This is unethical, possibly illegal, and very likely unenforceable in California.
Can California Companies Enforce Other Restrictions?
Section 16600 may restrict non-compete and non-solicitation agreements, but it does allow for some restrictions. In particular, California allows companies to protect confidential information and trade secrets.
That said, only true trade secrets are protected. A trade secret is information not generally known by the public that companies take reasonable steps to protect.
In other words, if someone were to disclose a trade secret, it would likely harm the company trying to protect the secret and financially benefit the disclosing party.
Companies cannot restrict former employees’ right to do business by making an unfounded trade secret claim. Also, companies may be able to require confidentiality agreements, but only if they draft them narrowly enough.
Like trade secrets, employers cannot use these agreements to try to circumvent prohibitions on non-solicitation agreements.
Talk to a Worker’s Rights Attorney
Did your employer ask you to sign an unenforceable non-solicitation or non-compete agreement? Even though companies know these agreements are unenforceable, they often try to get employees to sign them.
California passed these laws to protect workers and create a fair business environment. Intentionally breaking these laws is a dishonor to California and all of its hard-working residents.
California’s workers have rights. The Workplace Rights Law Group dedicates itself to protecting those rights. Our team of experienced employment law attorneys understands non-solicitation agreements.
We want to help you protect yourself against employers who try to force unenforceable agreements. Contact us today to schedule your free consultation.
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Theo Khachaturian
Theo is a trial & appellate lawyer whose practice has emphasized wage-and-hour class actions, business disputes, wrongful termination, discrimination, harassment, and intellectual property theft. He has tried civil cases and argued before various California Courts of Appeal.