Can Out-of-State Employers Enforce Non-Competition Restrictions in California?

It is becoming commonplace for California employees to be employed by out-of-state employers.  In some situations, the out-of-state employer will take advantage of the more employer friendly laws of the non-California venue and require the employee to sign non-compete agreements which may be enforceable under the laws of the non-California state.  So the question in this scenario is whether the non-compete provisions are enforceable?  Under the  current state of the law, the answer will depend on whether the employer or the employee first achieves a judgment.

From the employer’s perspective, non-California companies located where covenants not to compete are enforceable can sue in their home state to enforce an employee’s agreement not to compete and to enjoin that employee from working for a California competitor. From the employee’s perspective, both a California employee and the new California employer can sue in California to invalidate the covenant. The result is a “race to judgment.” In other online pharmacy words the party that gets a judgment on the merits first will win the “void” vs. “enforceable” battle.  The reason for this is because the final judgment which is decided first is entitled to full faith and credit between the states.  This is true even if it the rendered judgment is completely contrary to local public policy. Baker by Thomas v. General Motors Corp. (1998) 522 US 222, 233, 118 S.Ct. 657, 664.

Thank you for your interest in this article.  You should not rely upon it as legal advice. The information contained herein does not create an attorney-client relationship. This article is intended for entertainment and general information purposes only. Laws vary state. Anyone seeking legal advice for a specific situation should consult a qualified lawyer or similar qualified professional in the appropriate state.

This entry was posted in Business & Industry, Employment & Labor. Bookmark the permalink.

Leave a Reply