Legal Question in Employment Law in California
Non-Solicitation or Non-Competition Contract
Our company works as a sub-contractor for a large technology firm. Management indicates that all employees have signed a "Non-Solicitation" Agreement that requires that this technology firm pay a penalty should the employee solicit employment with this firm and is successfully hired. The only way to avoid the penalty is to leave both companies for an entire year and then seek employment with the technology firm. Additionally, management has also sent email indicating that the employee, as an individual, may be sued by the company, even if the penalty is paid. Verbally, it has been stated that our company may sue the individual for an entire year's worth of wages, as well. In a previous message about Non-Competition the attorney suggested reviewing "Business and Professions code section 16600." I have been unable to successfully bring up this document for review in order to ascertain whether it applies to this particular case. Any assistance would be greatly appreciated.
2 Answers from Attorneys
Re: Non-Solicitation or Non-Competition Contract
Such a penalty against an employee is illegal under "Business and Professions code section 16600." Send me you email address and i will email you a copy of the code section.
Re: Non-Solicitation or Non-Competition Contract
The non-competition agreement should set forth the penalty for breach of the agreement. The technology company is not bound to pay any damages arising under the employee non-competition agreement. There would have to be a separate agreement between your company and the technology company to make that enforceable.
B&P 16600 deals primarily with restrictions on trade on the sale of businesses and to business owners.
The non-competition agreement may or may not be enforceable depending on its terms. The terms must be reasonably limited in scope and time - although it appears that these probably are.
If the technology company wants one of your employees it may have to pay the fine and indemnify the employee for the lost wages and damages under the non-competition agreement.
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