Q: If my employer wants me to sign a non-compete agreement, what do you advise?
My advice is to talk to an experienced employment attorney regarding any California non-compete agreements. While unenforceable in California, employers are getting wise in terms of how they craft their agreements. For instance, if there is an employer who is based out of state, they will have their agreement governed by the laws of the other state because many other states don’t have the same protections that California has for employees.
In particular, other states allow for non-competition agreements. Frequently, employers will have employees sign a non-competition agreement based on the laws of, for example, Minnesota, which permits these types of agreements, and the employee will agree that they will adjudicate any of those claims in Minnesota, not in California.
If an employee signs an agreement like that, the company may take the position that it’s valid and binding, and subject to the laws of Minnesota, and that California has nothing to say about it. However, we have been involved in a number of cases where that same employee is working and living here in California, and we bring a lawsuit in California, essentially to have the California court strike down that type of a provision and allow the employee to go to work for a competitor after they leave the employ of the first company.
It is much easier (and less expensive) to try to negotiate out of non-compete provisions upfront rather than trying to litigate them later.
Q: If the company is located in Minnesota, and I get a similar job in California, am I competing with that company if their services are exclusive to Minnesota?
In that situation, potentially the agreement might be viewed as being overly broad. Practically speaking, if the Minnesota-based company doesn’t do business outside of Minnesota, it isn’t going to care if the employee goes to work in California doing the same thing.
It is only where the ex-employer views that employee as going to work for a competitor that they grow concerned about enforcing the non-compete provision in their employment agreement.