Non-Compete Clauses in Action

Previously on our blog, we discussed the enforceability of non-compete clauses. It is important to be familiar with the concept not only for contracting purposes, but also from the standpoint of being either an employer or employee. Recently, this issue has been in California state news, as it appears that large companies are trying to enforce non-compete clauses that are found in employment agreements of low-wage workers.

The case at issue involved Benny Almeida, a former employee of the company ServiceMaster. While at ServiceMaster, Almeida was paid $15-an-hour for his cleaning job. Another company reached out to him and offered to pay him $18 an hour to do cleaning work there. Almeida took the higher paying job, but was then threatened with legal action from ServiceMaster. The reason is because Almeida’s employment agreement with ServiceMaster contained a non-compete provision allegedly prohibiting him from doing similar work in the same geographic area as the ServiceMaster location. ServiceMaster has claimed that the non-compete provision is to prevent ServiceMaster from training employees only to see their efforts benefit competitors.

As we discussed previously, non-compete provisions are heavily disfavored both by the Courts and by the public policy codified in the laws of the California Labor Code.  However, the Code provides one exception to this general rule, allowing non-compete agreements between individuals selling the goodwill of a business, so as to protect a company’s intellectual property, trade secrets, or client lists.

Considering the intent behind the law, it is unlikely that a low-wage worker such as Almeida will be bound to a non-compete agreement with his or her previous employer. But as shown by the Almeida case, there is still uncertainty about the line between illegal and permissible non-compete contract provisions and whether employers can or (economically) should enforce the non-compete provisions in their employment contracts.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

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