In September, employers in California faced a shift in the legal landscape as the state introduced a cause of action that enables employees to challenge non-compete agreements and potentially win damages and attorney’s fees. This move was initially discussed in our previous article titled “New Golden State Law to Create Gold Rush Litigation Testing Non-Compete Agreement.”
Further complicating things for employers, last week California law explicitly codified Edwards v. Anderson, 44 Cal.4th 937 (2008), rendering any noncompete agreement in an employment context void, regardless of the clause’s scope within an employment contract. This development signifies a concrete change to the handling of non-compete agreements in the state’s employer-employee relationships, and has ramifications that legal professionals in corporate settings should closely monitor.
As this legal change unfolds, corporate counsel and legal professionals should consider revising their non-compete strategy, or at the very least, re-evaluate the exposure level this development brings to their existing non-compete bindings with employees. This development further magnifies the importance of understanding local state laws and their implications on the employer-employee relationship. In tandem with thorough understanding of local statutes, a firm and complete grasp of the company’s position in respect to these laws is paramount.
Major corporations should also consider investing in professional seminars and training programs aimed at understanding the intricate dynamics of employer-employee relationships, especially in light of newly implemented laws. It is thereby essential to stay abreast of the recent changes in employment law, particularly those that directly affect pre-established agreements and contracts.