As a business or executive based in Los Angeles, it is likely that you are already familiar with non-compete clauses and how they can protect your business. While non-compete clauses are commonplace in many employment contracts, they are also found in other relationships, such as master services agreements and joint venture agreements. Regardless of what you choose to call the clause, this article will explain how to get started on a non-compete clause in Los Angeles.

What is a Non-Compete Clause?

A non-compete clause is an agreement between two parties that restricts one party from entering into a similar business arrangement with a competitor. This means that, for a certain period of time, the party with a non-compete clause cannot work or do business with a direct competitor. Non-compete clauses typically apply to a discrete list of activities and businesses, such as manufacturing, product distribution, or technical consulting.

Understanding Non-Compete Laws in Los Angeles

When it comes to non-compete clauses, it is important to understand the laws in Los Angeles and California that govern them. California is a state that has adopted a “strong public policy of encouraging open competition and employee mobility.” Under California law, non-compete clauses are generally unenforceable unless certain conditions are met. For example, the clause must be reasonable in terms of its scope and duration. When it comes to duration, courts generally hold that a clause must be no longer than two years unless the circumstances are exceptional.

In terms of scope, a non-compete clause must be reasonable in terms of geography and the type of businesses that it is covering. Courts frown upon clauses that prohibit all competition, as they may be overly restrictive and thus unenforceable. As a result, it is important to carefully review the scope of a clause to ensure that it is reasonable.

Writing a Non-Compete Clause

When drafting a non-compete clause, it is important to ensure that it is clear and concise and that it stands a reasonable chance of being enforced by a court. The clause should clearly define the term “competitor” and clearly delineate the scope of activities that are barred. It should also include a start and end date for the clause. If the clause plans to restrict activities outside of California, the clause should clearly state which states are included in the scope of the non-compete clause.

Finally, it is important to understand that a non-compete clause is not enforceable unless it is accompanied by adequate consideration. This means that the employer must give the employee something in exchange for signing the non-compete clause. This can include a salary increase, additional benefits, or a signing bonus.

Enforcing Non-Compete Clauses

In the event that an employee violates a non-compete clause, the employer may have the right to pursue legal action to enforce the clause. For example, the employer may be able to seek injunctive relief, which can prevent the employee from entering into the prohibited business activity. Additionally, the employer can also pursue damages or attorney’s fees. In any case, it is important to consult with a knowledgeable attorney in order to ensure that all steps are taken in accordance with the law.

Getting Legal Help with Non-Compete Clauses

Whether you are drafting a non-compete clause or seeking to enforce an existing non-compete clause, it is important to have the assistance of an experienced business lawyer. The attorneys at UpCounsel are here to provide legal assistance in all areas related to non-compete clauses. With their expertise, you can rest assured that your legal matter is taken care of with the utmost care. Contact UpCounsel today to consult with a business lawyer who understands local regulations and can help you get started with a non-compete clause in Los Angeles.


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