Legal Question in Business Law in California

Laws in regards to competition

i received a call from the local competition and the person asked to speak to my employee. so my employee picked up the phone. after a second she put the conversation on speaker phone. it turned out to be the competion (i didn't know at first who it was). the owner of that business was asking my employee to come work for him, guarantee her better benefits and more money. now is there any law that prohibits this? i heard it was illegal and wanted some advice. thank you.


Asked on 7/22/05, 2:49 pm

3 Answers from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Laws in regards to competition

The California Supreme Court confirmed as recently as August, 2004 (see Reeves v. Hanlon, 33 Cal.4th 1140) that in California there is nothing inherently illegal or wrong with Employer X contacting the employees of Employer Y to come to work for him, provided the employees in question are "at will" and not under an enforceable employment contract that would forbid the employee to work for a competitor (and such contracts are generally not enforceable anyway). There is a further requirement that soliciting the employee(s) not be part of a deliberate plan to do major economic harm to Employer Y. So, there probably was nothing wrong with the call. Further, California has a strong policy favoring mobility in the workplace.

However, something illegal did happen here.

It was absolutely illegal to "broadcast" the phone conversation by placing the call on speakerphone without the knowledge and consent of the caller. This was a breach of California's Penal Code, section 632(a), which forbids eavesdropping on or recording telephone conversations without the consent of all parties. This crime carries a fine of up to $2,500 and/or jail or prison time.

Therefore, I would suggest that those who participated in this illegal eavesdropping be very cautious about pointing fingers at the caller -- they could end up being the ones with legal problems!

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Answered on 7/23/05, 4:25 pm
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Re: Laws in regards to competition

First, give your employee a raise. Then, contact your business attorney to draft 1) a noncompete agreement for your employee to sign; and 2) an appropriate letter to send to your competitor warning them not to again engage in such behavior.

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Answered on 7/22/05, 3:35 pm
Michael Olden Law Offices of Michael A. Olden

Re: Laws in regards to competition

i diagree with my fellow attorney -- first of all ih is in Va. and not oakland, ca where i have parcticed for over 30 years -- his is an option only and i would suggest you have a business attorney like myself write a cease and distist letter to your competitor immedialy and then explore options in how to stop actions like thses in the future -- ultimealy you may have to file a law suit but that is way down the way if this competitor doesn't stop --- i am at 510-465-6000

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Answered on 7/22/05, 3:58 pm


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