Non-Compete Might Fly in California

California is famous for its general refusal to enforce no-compete agreements.  With certain limited exceptions, such agreements are void as against public policy. In a recent case, therefore, the state’s court of appeals knocked out as “overly broad” a provision that prevented a business customer of a software consulting firm from hiring employees of the consulting firm.

The facts in this one were pretty easy. The consulting firm had supplied only 16 hours of service to the client, the employee who was hired had not worked for the client at all, and the hiring had come through an unrelated Internet job ad. The consulting firm’s clause, which would have barred the hiring, was far too broad.

Interestingly, the court suggested in dicta that a narrower clause the prohibited solicitation of employees who had actually worked for the client might be enforceable.  Rick Bergstrom of San Francisco’s Morrison & Foerster LLP offers his take on the facts and the holding of the case here. (Free registration required.)

[Frank Snyder]