Legal Question in Business Law in California
I am an independent sales rep living in California. Recently, one company did not renew my contract and execised the 60 day opion to terminate the contract. The agreement also had a do not compete clause in it. In there termination letter they said that the agreement in null and void as of 2/26/2011. Six months later they are trying to enfore the do not compete clause. Can they do this!
5 Answers from Attorneys
Non-competition clauses are unenforceable in California. If they actually said the contract was null and void, that means it basically never existed, so the clause also never existed.
As you might imagine, the answer is "it depends"...upon the "survival" clauses in the signed agreement on the non-competition provisions...so, if you qualify for our "pro bono" programs", we do offer a FREE 15 minute email initial review of most business documents/agreements.
By Grace...
Shawn Jackson ESQ. (707) 584-4529
Business Development Attorney
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Generally no. Just do not violate the rules on 'unfair competition' and avoid legal problems.
California law contains a strong prohibition against non-competition agreements, with limited exceptions. The statute at issue, California Business and Professions Code section 16600, specifically states:
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.
California courts have interpreted the law quite strictly ruling that section 16600 reflects an important state public policy favoring the right of employees to change jobs freely. Courts have held that �the interests of the employee in his own mobility and betterment are deemed paramount to the competitive business interests of the employers, where neither the employee nor his new employer has committed any illegal act accompanying the employment change.� (Metro Traffic Control, Inc. v. Shadow Traffic Network (1994) 22 Cal.App.4th 853, 860.)
You may want to look at Business and Professions Code section 16600, and the sections around that section, to determine whether you meet one of the exceptions.
I agree most strongly with Mr. Roach. I disagree with Mr. Jackson.
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