Every executive should understand the legal landscape they navigate in their day-to-day business activities. This is especially true when it comes to non-compete clauses — written agreements between employers and employees that prohibit employees from engaging in activities that compete with their employer’s business. This guide is designed to help executives seeking quality legal counsel in Los Angeles navigate the nuances of non-compete legislation.

What Is a Non-Compete Clause?

Non-compete clauses are standard contractual provisions that restrict the future employment of workers, typically executives, from gaining employment with a business that is in direct competition with their former employer. The clauses are generally included in employment contracts. Under California law, non-compete clauses are disfavored and generally unenforceable. However, there are exceptions to the rule and it is important to receive legal counsel before entering into an agreement or signing a contract.

Non-compete clauses often contain two key components — restrictive language preventing employees from working for or with competitors and probationary periods setting the length of time that the clause remains in effect. Employees subject to these clauses should also be aware of the types of activities that the clause controls, such as soliciting customers or poaching former colleagues.

Although it is illegal in California to require an employee to remain loyal to their employer through a non-compete agreement, employers may impose certain restraints and limits on the conduct of their employees during the term of their employment and after they have left the company.

Under California law, a non-compete clause is only enforceable when it satisfies certain conditions, such as:

• The clause is necessary for the protection of the employer’s legitimate business interests;

• The clause does not create an undue hardship on the employee;

• The clause does not extend beyond reasonable terms; and

• The clause does not result in a violation of public policy.

Considerations Before Signing a Non-Compete Clause

Before signing a non-compete clause, executives need to seek legal counsel to ensure that they understand the potential risks and potential restrictions associated with such clauses. Additionally, executives should be mindful of certain considerations before agreeing to the clause, such as:

• The scope of the clause, which should be as narrow as possible and specifically tailored to the employer’s needs;

• The duration of the clause, which should be reasonable and not impose an undue hardship on the employee;

• The geographic area encompassed by the clause, which should be specified and as minimal as possible;

• A limitation on the activities included in the clause, which should be written in a way that is not excessively broad;

• Whether the clause is applicable only if the employee has access to sensitive or confidential information; and

• Whether the clause, if violated, will automatically entitle the employer to damages, or if the parties will have to go to court to enforce the clause.

Getting Quality Legal Advice in Los Angeles

It is always advisable for executives wishing to enter into a non-compete agreement to speak with a lawyer knowledgeable in California business law. At UpCounsel, our team of experienced lawyers are well versed in non-compete legislation and the various regulations and caveats of California law. Our team of experienced business attorneys have an average of 14 years of experience, providing high quality and cost-effective legal services for businesses of all sizes.

Through UpCounsel, you can access our network of experienced lawyers that understand local regulations and are well equipped to advise you on non-compete clauses in California. Our profiles of online attorneys also include client ratings and reviews of recent work so you can rest assured that you’re getting quality legal advice for your non-compete clauses.


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