California Court: Noncompetes in Employment Contracts Impermissible

The Second District Court of Appeal in Los Angeles issued a significant opinion a few weeks ago, finding that noncompete agreements in California employment contracts are impermissible. The decision makes clear that such agreements are generally invalid and employees cannot be compelled to sign them as a condition of employment (Edwards v. Arthur Andersen LLP, No. B178246 (Cal.App. 2 Dist./Div. 3) (Aug. 30, 2006)).

In so holding, the three-judge panel stated that such agreements violate California's public policy in favor of protecting employee mobility. The court went on to state that "noncompetition agreements burden a terminated employee with the task of guessing, at his or her peril, whether a court might find particular restrictions sufficiently narrow or overly broad."Hat tip to HR Lori for the link.