What is a Non-Compete Clause or Non-Competition Agreement?
A non-compete clause or noncompetition agreement is a contract that generally states that an employee, former business partner, or former business owner will not engage in the same type of business as the employer, or former business partner or owner in which the individual had an ownership interest. Despite being very desirable, these agreements are typically illegal and invalid in the state of California unless the non-compete clause is part of the sale or dissolution of a corporation, limited liability company, or partnership (Cal. Bus. & Prof. Code 16601, 16602), or necessary to protect an employer’s trade secrets (like certain customer lists). Why Are Non-Competition Agreements Typically Unenforceable? In California the courts are loath to enforce a non-competition agreement because pursuant to California Business and Professions Code section 16600, “Except as provided in this chapter, every contract by which anyone is restrained from engaging in lawful profession, trade or busine
