Business Law

Business Law News 2018, ISSUE 1

Companies Face Consequences for Unenforceable Noncompetition Clauses in California

Justene M. Adamec

Justene Adamec has been a partner in Pumilia & Adamec LLP since 1995. Pumilia & Adamec is a Los Angeles law firm, whose clients are mid-size, closely-held companies. With almost 30 years of experience, Justene handles business litigation both in the courts and before arbitration panels. Justene is currently co-chair of the Business Litigation Committee for the California Lawyers Association. She has published several articles on issues that affect businesses.

California has a strong public policy in favor of competition. With very narrow exceptions, any contract provision that restrains competition after an employee leaves the employer is unenforceable.1 Companies can be held liable in tort for inserting an unenforceable noncompetition clause in an otherwise enforceable agreement. This article summarizes the basic rules on enforceability, discuss the cases that impose liability, and provide guidelines for drafting noncompetition clauses within the exceptions.

Introduction

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