California strictly prohibits noncompete agreements with three very narrow exceptions involving partners, LLC members, and sale of a business (Business and Professions Code section 16600).  Any agreement that limits the ability of an employee or independent contractor from engaging in the work of his or her choosing is void under California law.

Here are some examples of provisions that would be void under California law:

Employee shall not directly or indirectly solicit any current customers to transfer any account or relationship from Employer to any business other than Employer.

For 18 months after termination of employment Employee shall not render services, directly or indirectly, to any competitor in which such services could enhance the use or marketability of a competing product.

These kinds of provisions are very common in employment and independent contractor agreements even though they are unenforceable.  An employee should not sign an agreement that contains a clause like this.  Even though it’s unenforceable, a new employer might refuse to hire an employee that has signed such an agreement unless the former employer releases its rights under this agreement.  Why?  The new employer does not want to take a chance that the former employer will litigate the issue even though the chance of success is basically nil.

While employers should not put any non-solicitation or non-compete provisions into their agreements, they can and should include provisions to protect any secret information such as a prohibition on employees and former employees from revealing company secrets to any third party.

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