Legal Question in Employment Law in California
I've been asked to sign a confidentiality agreement at my company and it has the following clause:
"I agree that I will not engage in outside work or other conduct that detracts from my job performance, is harmful to the Company's best interests, or otherwise presents a conflict of interest with the obligations to the Company. This includes without limitation: (1) working for any person or entity that competes directly or indirectly with the company or making preparations to develop or produce competitive products or services; or (2) work which requires the use of the Company's property; facilities equipment or time."
My question is twofold:
One, my company manufacturers and sells herbal supplements. What I wanted to do was open up an eBay store in which I would also sell herbal supplements. However, these would be supplements from other companies and I would not be selling the products made by my company. I would simply be selling herbal supplements bought from other companies by me and re-selling them on eBay for a profit. -- Would that be a violation of the above paragraph or not?
Secondly, under California's laws which forbid non-compete clauses, can they even forbid me from selling these products on eBay legally as long as I do all the work outside of office hours?
Thank you.
2 Answers from Attorneys
As to your first question, all employers have the right to require employees avoid actual or potential conflicts of interest, as employees have a duty of loyalty to their employer. So, yes, the provision is enforceable. The best way around it is to inform your employer of what you would like to do and ask for their permission to engage in the side business. If they approve it, get it in writing. If they refuse, you have a decision to make as to what is most important to you.
Regarding your second question, non-compete agreements are unenforceable as it applies to subsequent employment. But, of course, an employer can insist you not engage in a business that competes with them while you are still employed by them.
Of course it would be a violation of the non-compete clause for you to promote another company's products in any way. And as Mr. Kirschbaum points out, non-compete clauses are only restricted (not even entirely illegal) AFTER you are employed by the employer who has you sign the agreement. They are completely legal for current employees.
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