Legal Question in Employment Law in California

Non-Compete Agreement for a Corporate Partner

I have decided to leave the company (corporation) of which I am a partner. I had signed a non-compete clause a couple of years ago that says I cannot work anywhere in the area for two years with any company or business that our corporation may compete for business with in the future or any entity doing similar business (IT).

I do not plan on starting another company, just working for one that does do similar business and will possibly compete, in the future, with the company I am leaving.

I have read California's labor code 16600, but I am not clear how this applies to a partner leaving the company (dissociation). In particular, labor code 16602.


Asked on 5/07/04, 6:05 pm

2 Answers from Attorneys
Thomas Pavone Pavone & Cohen

Re: Non-Compete Agreement for a Corporate Partner

If you are an owner of the corporation a non-compete agreement may be enforceable. You should seek the advice of an attorney before you resign so that you are aware of all your options and liabilities. Feel free to call me to discuss the specifics.

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Answered on 5/11/04, 4:40 pm
Alden Knisbacher knisbacher law offices

Re: Non-Compete Agreement for a Corporate Partner

Non-competes are disfavored and generally unenforceable. There are exceptions -- as listed in Business & Professions Code 16601 and 16602. Based on what you've written it does not sound like 16602 applies -- the non-compete was given to you two years before you left the company. The prudent course in these cases in many cases is to be the first one into court. You would want to obtain a declaration in a California court that says the non-compete is unenforceable. If there is any way the corporation could file suit out-of-state, they might try to sue in a location that is more friendly to non-competes, to enforce the agreement.

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Answered on 5/11/04, 8:38 pm


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