The non-compete clauses that many employers make their employees sign upon hiring have been consistently held to be invalid and unenforceable under most circumstances, because California law has a general policy of discouraging unreasonable restraints on trade, and encouraging healthy competition.
There seems to be a confusion, however, between non-compete and non-solicitation agreements which are distinct and different kinds of contract. The non-compete agreement usually provides that an employee may not engage in the same business as the employer is engaged in, within a certain locality for a certain period of time. The non-solicitation agreement, on the other hand, typically provides that the employee who is leaving the company to not solicit his services to his employer's current or past clients. Unlike non-compete agreements, the non-solicitation agreements are usually upheld and rightfully so. The law does not permit interfering with existing business that took a long time and much effort to build by "stealing" clients.
It is important, however, to understand what the term "solicitation" means. To solicit in the employment law context means "to actively seek business." The key term is "actively." The non-solicitation agreement may only prohibit the employee's initiation and active pursuit of the business of client of his former employer. The law does not require employee or new employer to refuse to provide services to clients who independently initiate contact and invite the employee to provide them with services. Aetna Bldg. Maintenance Co. v. West (1952) 39 Cal.2d 198. In that case, the California Supreme Court noted that merely informing customers of a change of employment without more is not solicitation and the willingness to discuss business upon invitation of another party does not constitute solicitation.
There seems to be a confusion, however, between non-compete and non-solicitation agreements which are distinct and different kinds of contract. The non-compete agreement usually provides that an employee may not engage in the same business as the employer is engaged in, within a certain locality for a certain period of time. The non-solicitation agreement, on the other hand, typically provides that the employee who is leaving the company to not solicit his services to his employer's current or past clients. Unlike non-compete agreements, the non-solicitation agreements are usually upheld and rightfully so. The law does not permit interfering with existing business that took a long time and much effort to build by "stealing" clients.
It is important, however, to understand what the term "solicitation" means. To solicit in the employment law context means "to actively seek business." The key term is "actively." The non-solicitation agreement may only prohibit the employee's initiation and active pursuit of the business of client of his former employer. The law does not require employee or new employer to refuse to provide services to clients who independently initiate contact and invite the employee to provide them with services. Aetna Bldg. Maintenance Co. v. West (1952) 39 Cal.2d 198. In that case, the California Supreme Court noted that merely informing customers of a change of employment without more is not solicitation and the willingness to discuss business upon invitation of another party does not constitute solicitation.
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