maybewronged! said:
What is the name of your state? CA
I was laid off and formed a company within 2 days. I am a Marketing professional and my previous employer just sent me a letter from his lawyer that I should not start my business and target the same customers that I had during my tenure with them. I am also being accused of raiding former employees, which I haven't done. I understand that this is competing with previous employee but if I am laid off without any warning what option do I have but to either find a job in the same business or try forming a company in the same business!!! Kindly advise
My response:
Here's a News Flash: "Non-Compete" Agreements are illegal, and wholly, unenforceable in California.
An employee's covenant not to compete with his or her employer is unenforceable under Ca Bus & Prof § 16600.
Covenants Not to Compete Generally Void:
"Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." [Ca Bus & Prof § 16600 (emphasis added)]
Public policy:
California courts have consistently declared this provision an expression of public policy to ensure that citizens shall retain the right to pursue any lawful employment and enterprise of their choice. [Metro Traffic Control, Inc. v. Shadow Traffic Network (1994) 22 Cal.App.4th 853, 859, 27 Cal.Rptr.2d 573, 577]
The interests of employees in their own mobility and betterment are deemed paramount to the competitive business interests of employers, where neither the employee nor his or her new employer has committed any illegal act accompanying the employment change. [D'sa v. Playhut, Inc. (2000) 85 Cal.App.4th 927, 933, 102 Cal.Rptr.2d 495, 499]
Effect:
Despite having agreed not to compete, a former employee has the right to enter into competition with his or her former employer, even for the business of those who had formerly been customers of the former employer. [Muggill v. Reuben H. Donnelley Corp. (1965) 62 Cal.2d 239, 242, 42 Cal.Rptr. 107, 109] It makes no difference that the covenant not to compete is reasonably limited in time and geographic scope. [KGB, Inc. v. Giannoulas (1980) 104 Cal.App.3d 844, 853, 164 Cal.Rptr. 571, 580]
Limitation--no unfair competition:
The only limitation is that the former employee's competition must be fairly and legally conducted (e.g., disclosure of former employer's trade secrets or other confidential information may be regarded as unfair competition). [Rigging Int'l Maint. Co. v. Gwin (1982) 128 Cal.App.3d 594, 606, 180 Cal.Rptr. 451, 457; John F. Matull & Assocs., Inc. v. Cloutier (1987) 194 Cal.App.3d 1049, 1055, 240 Cal.Rptr. 211, 214--
upholding injunction preventing former employee from soliciting former employer's clients without determining whether the customer list was a trade secret]
Application:
An employment agreement provided in part: "Employee will not render services, directly or indirectly, for a period of one year after separation of employment with (Employer) to any person or entity in connection with any 'competing product' (as defined in the agreement)." This covenant was held to violate Ca Bus & Prof § 16600 and was therefore void and unenforceable. [D'sa v. Playhut, Inc. (2000) 85 Cal.App.4th 927, 931, 102 Cal.Rptr.2d 495, 498 (parentheses added)] The covenant could not be upheld merely as an agreement not to disclose trade secrets because other provisions of the agreement provided for confidentiality. The fact that the covenant not to compete was limited to one year made no difference. [D'sa v. Playhut, Inc., supra, 85 Cal.App.4th at 935, 102 Cal.Rptr.2d at 501]
IAAL
