Are Non-Solicitation Agreements Enforceable in California? Exceptions and Legal Insights

Non-solicitation agreements in California are mostly unenforceable, except when tied to trade secrets, business sales, or partnership dissolutions. This article outlines key exceptions, legal challenges, and how courts determine when limited restrictions may stand under state law.

By Brad Nakase, Attorney

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Table of Contents

1. Introduction

2. Non-solicitation agreement: What is it?

3. Are Non-Solicitation Agreements Enforceable in California Under Employment Law?

4. What happens if a lawsuit is filed?

5. What makes non-compete agreements distinct?

Introduction

According to the California Business and Professions Code, non-solicitation clauses in employment agreements are typically invalid. This implies that, although there have been certain exceptions from the law, your former company cannot normally prevent you from employing current staff or approaching current clients.

Keep in mind these three important points:

Depending on whether they safeguard trade secrets or have “no detrimental impact” on company operations, non-solicitation agreements might be legal.
Non-solicitation contracts are distinct from non-compete contracts, which stipulate that workers will not return to work for a rival company following their termination.
The majority of non-compete contracts are unenforceable, just as non-solicitation agreements.

Many employees and employers often ask: “Are Non-Solicitation Agreements enforceable in California?” The short answer is that they are generally not, but there are narrow exceptions you should know about. Regarding non-solicitation agreements, we address the following commonly asked questions in this article.

Non-solicitation agreement: What is it?

A non-solicitation agreement, sometimes known as a “non-interference agreement,” is a contract that binds you, should you leave the organization later, to not:

Attract the company’s clients or extend employment offers to its current staff.
According to non-solicitation contracts, you are not allowed to steal clients or employees from your previous employer.

Most employment contracts that you must execute in order to work for the company contain non-solicitation provisions.

Are Non-Solicitation Agreements Enforceable in California Under Employment Law?

Non-solicitation clauses for employees are generally illegal under California law. This is due to the fact that public policy aims to reduce hiring limitations.

However, in certain cases, state courts in California have recognized worker non-solicitation contracts that are specifically tailored.

“Are non-solicitation agreements enforceable in California?” In most employment scenarios, the answer is no, unless the agreement protects trade secrets or falls under specific legal exceptions.

1. No Adverse Effects

Because the complainant’s employees were not prevented from contacting the defendant or obtaining a job with them, the judges in a particular decision involving an infringement of the agreement for employment ruled that the non-solicitation clause was enforceable. The sole limitation was that the other side was not allowed to get in touch with the plaintiff’s staff first.

Because there was “no overall adverse effect on trade and business,” the non-solicitation clause was enforceable.

Therefore, it would seem that the likelihood of an employment agreement being unenforceable according to California state law increases with the scope and restrictiveness of its non-solicitation clause. However, courts may be more likely to uphold non-solicitation contracts if they are brief and minimally restrict worker mobility.

2. The exception for trade secrets

When non-solicitation contracts are required to safeguard a company’s trade secrets and other private information, the courts in California do enforce them. The corporation is shielded from unjust rivalry by former workers who want to use its proprietary information for their personal gain, according to the “trade secret exclusion.”

3. Business Sale

If a non-solicitation contract is a condition of someone selling every one of their shares or interest in a business, partnership, or an LLC (Limited Liability Company), it may be enforceable. These solicitation contracts are typically an element of international corporate transactions, and courts construe these non-solicitation contracts by taking the transaction as a whole into consideration.

Courts may still ask: “Are Non-Solicitation Agreements Enforceable in California when tied to business sales or trade secrets?” In these cases, the answer leans toward yes, provided the scope is limited.

4. Breakup of Partnerships

In situations where partners decide not to approach their clients or other partners in the event that the partnership disintegrates, non-solicitation contracts may be enforceable.

What happens if a lawsuit is filed?

The following reasons are typically asserted by your previous company in California if they file a non-solicitation case against you:

Violation of the contract,
Violation of the fiduciary obligation,
Interference with the terms of the contract,
Interfering with potential financial gain,
Unfair competition, and/or
Misuse of confidential information.

Then, arguing that your previous employer did not make a claim for relief, you could submit a request to dismiss. If that does not work, you may submit a request for a summary ruling. This asks the court to rule on the case’s uncontested facts.

You have the right not to agree to an out-of-court settlement. The case/matter will proceed to trial. (Please be aware that in certain situations, arbitration is used to resolve disputes rather than the legal system.)

Two forms of relief are usually sought by former employers:

A court order prohibiting you from hiring their staff or approaching their clients, and
Restitution for whatever money your activities may have cost them is an example of an injunctive remedy.

It is possible to appeal a state district court decision to the appellate court. Finally, you can appeal to the California Supreme Court. There is some possibility that the United States Supreme Court may hear appeals of some state’s Supreme Court ruling/decisions, although this is rare.

These matters typically end out of court since they might drag on for several years through the legal system.

What makes non-compete agreements distinct?

Non-compete agreements are provisions in employment contracts. They highlight that, should you leave the organization later, you are forbidden from working for a rival company for a predetermined number of years/months.

A non-compete agreement prohibits you from working for a rival business. Non-solicitation contracts prohibit you from employing your previous employer’s present staff and/or approaching their clients.

Non-compete agreements may prevent you from pursuing the career you have chosen. They are unenforceable (in most cases) in California, just like non-solicitation contracts.

If you are still wondering, “Are Non-Solicitation Agreements Enforceable?” the safest approach is to assume they usually are not, unless crafted narrowly around trade secrets, business transactions, or partnership dissolutions.

Have a quick question? We answered nearly 2000 FAQs.

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Are Non-Solicitation Agreements Enforceable in California? Exceptions and Legal Insights

Introduction

Non-solicitation agreement: What is it?

Are Non-Solicitation Agreements Enforceable in California Under Employment Law?

What happens if a lawsuit is filed?

What makes non-compete agreements distinct?

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