Changing jobs is often not as easy as leaving one position and accepting another. Your old employer may have their own interests at play. They could have a legitimate interest in protecting their own proprietary data and secrets. Even so, your former employer’s actions may also unreasonably encroach on your own career and professional mobility.
Although your old employer has their own valid considerations and concerns, there are also restrictions on how they can protect their own information. You have the right to change jobs, and nobody can take that from you, although you must still follow your own legal obligations to your old employer.
Businesses do not like to lose employees under most circumstances, but especially to a competitor. Besides losing valuable skills to a competing busines company also worries that an employee can switch sides and bring the playbook with them. Although numerous laws protect trade secrets, companies also cannot overreach. Still, you must be careful as an employee switching jobs.
Companies may ask you to sign multiple agreements when you accept a job or in exchange for other benefits at work. But they cannot ask you to sign any type of binding agreement when there is no consideration. These agreements are intended to protect their own interests. The various agreements may include:
Historically, companies have tried to make widespread use of noncompete agreements to restrict your post-employment options. Some of these agreements have overreached, and they have not always been enforced by courts.
Both the state and federal legal landscapes have been changing for noncompete agreements. Nationally, in January 2023, the Federal Trade Commission proposed a rule that would make it illegal for companies to include noncompete agreements in employment contracts. This is still under consideration and is likely to go to a vote in the Spring of 2024.
On a state level, California law renders noncompete agreements unenforceable, unless they are signed as part of the sale of a business, its goodwill, or all of its assets. Taking things one step further, last September Governor Newsom signed SB 699 into law. Effective January 1, 2024, and codified at Cal. Bus. Prof. Code §16600.5, employers can no longer attempt to enter into a noncompete agreement with an employee nor can they seek to enforce a prior noncompete agreement. This holds true even if the prior agreement was signed at a time when such an agreement was allowed or in a jurisdiction where it was legal and enforceable.
Another bill, AB 1076, provided more reinforcement of the strong prohibition on employee noncompete agreements. This bill codified caselaw, including in Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, voiding noncompete agreements that do not fall into the narrow exceptions. AB 1076, codified at Cal. Bus. Prof. Code §16600.1, specifically makes it unlawful to include a noncompete provision in an employment agreement and requires employers to notify all employees who have such a clause in an existing agreement that the noncompete aspects of the existing agreements are now void.
Even considering the very strong prohibitions in California, employee non-competes may still be enforceable in other states, at least until any federal rule takes effect.
Notwithstanding the new prohibitions on noncompete agreements, the law recognizes that your employer may have a valid interest in getting you to sign confidentiality or non-disclosure agreements. Businesses do have to protect their own intellectual property and processes, and they want to keep various other things out of the public realm.
While protection of trade secrets is permissible, some businesses may tend to overreach with these types of agreements. A court would look at the practical effect of any type of confidentiality or NDA. If the result is that they functionally keep you from taking a position with a competitor, these agreements may be unenforceable.
To protect yourself, it is crucial to know what you have signed. You could very well be breaching a valid agreement if you take or divulge certain information, and you do not want to take the chance of having a court decide whether an agreement is enforceable. Then, you could be in legal jeopardy.
With that in mind, these guidelines are generally advisable:
Micah Nash is an experienced business litigator with over fifteen years of experience representing clients in a broad range of commercial disputes. Micah understands that sound legal counsel extends beyond issue-spotting and pre-packaged litigation strategies. He endeavors to identify his clients’ goals, anticipate possible adverse developments, and craft effective solutions as quickly and efficiently as possible. He offers straightforward legal advice and works to ensure efficient results. In all of his cases, he is committed to preventing litigation costs from spiraling out of control. Learn more here.