By now this ought to be the accepted and undisputed black letter law: in the State of California, nothing good can come of a non-compete clause. A non-compete clause is generally illegal and in violation of the public policy set forth in California Government Code Section 16600. The reasoning is simple: the public policy of the State of California simply and unequivocally supports the rights of employees to seek work in their chosen profession or field. An employer’s general attempts to limit where an employee finds his or her next job, except for the employer’s legitimate interest in maintaining its confidential and proprietary information, is against public policy. An employer – who, under the “at will” laws of the same State of California, has the right to fire an employee “at will” (that is, for any reason that does not violate any specific law) – should not be permitted to prohibit an employee from finding new, gainful employment in his or her field. After all, fair is fair.
Therefore, it should come as no surprise that the court in Silguero v Creteguard, 187 Cal. App. 4th 60 (2010) held that a plaintiff stated a cause of action for violation of public policy where her current employer fired her because her past employer wrote a letter asking that her current employer assist in enforcing an illegal non-compete agreement prohibiting her from working in sales for 18 months after the termination of her employment. This is a simple, straight forward, public policy claim that should serve as a warning to employers to act cautiously regarding non-compete agreements – or better yet – just stay away from them.
The only question in the Silguero case is whether the employee should have also brought a claim against her past employer based on the letter it wrote, for violation of public policy and/or other tort claims such as intentional interference with contract or intentional interference with prospective economic advantage. After all, Silguero’s past employer really is as guilty a party as her current employer, as its actions caused her current employer to fire her. Let’s keep hoping that employers stay away from these non-compete agreements, and if they don’t, that the courts keep telling them to do so!
January 23, 2011