Research summary
Research summary
Topic summary
Holdings that reject the proposition, each with the opinion cited.
Important claims and supporting citations
Noncompete covenants in employment contracts are enforceable under Section 16601 when executed in connection with the sale of a business or ownership interest.
In Fowler v. Varian Associates, Inc. (1987), the California Court of Appeal ruled that an agreement preventing an employee from assisting a competitor while still employed is not void under Section 16600.
The Delaware Court of Chancery noted in 2019 that under Labor Code § 925(e), California's public policy against noncompetes is subordinate to party autonomy when the employee is represented by legal counsel.
In South Bay Radiology Medical Group v. Asher (1990), the California Court of Appeal affirmed that a partnership clause conditioning capital account and goodwill payments on a withdrawing medical partner’s refraining from competing in the county is valid under Section 16602.
The California Court of Appeal in Blue Mountain Enterprises, LLC v. Owen (2022) ruled that a customer non-solicitation covenant in a CEO's employment agreement is enforceable under Section 16601 following a corporate reorganization.
In Vacco Industries, Inc. v. Van Den Berg (1992), the California Court of Appeal upheld a noncompetition agreement binding a minority shareholder (3%) who sold his equity concurrently with a buyout.
The California Court of Appeal held in Loral Corp. v. Moyes (1985) that a restriction on soliciting former co-workers is not a significant restraint on engaging in a profession and is not void on its face under Section 16600.
The California Court of Appeal held in Haight, Brown & Bonesteel v. Superior Court (1991) that an agreement compensating a firm for the loss of business when a withdrawing partner takes clients is not void as against public policy.
Outstanding questions
- Noncompete covenants in employment contracts are enforceable under Section 16601 when executed in connection with the sale of a business or ownership interest.
- In Fowler v. Varian Associates, Inc. (1987), the California Court of Appeal ruled that an agreement preventing an employee from assisting a competitor while still employed is not void under Section 16600.
- The Delaware Court of Chancery noted in 2019 that under Labor Code § 925(e), California's public policy against noncompetes is subordinate to party autonomy when the employee is represented by legal counsel.
- In South Bay Radiology Medical Group v. Asher (1990), the California Court of Appeal affirmed that a partnership clause conditioning capital account and goodwill payments on a withdrawing medical partner’s refraining from competing in the county is valid under Section 16602.
- The California Court of Appeal in Blue Mountain Enterprises, LLC v. Owen (2022) ruled that a customer non-solicitation covenant in a CEO's employment agreement is enforceable under Section 16601 following a corporate reorganization.
- In Vacco Industries, Inc. v. Van Den Berg (1992), the California Court of Appeal upheld a noncompetition agreement binding a minority shareholder (3%) who sold his equity concurrently with a buyout.
- The California Court of Appeal held in Loral Corp. v. Moyes (1985) that a restriction on soliciting former co-workers is not a significant restraint on engaging in a profession and is not void on its face under Section 16600.
- The California Court of Appeal held in Haight, Brown & Bonesteel v. Superior Court (1991) that an agreement compensating a firm for the loss of business when a withdrawing partner takes clients is not void as against public policy.
View all claims (text)
Claims
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Noncompete covenants in employment contracts are enforceable under Section 16601 when executed in connection…
Noncompete covenants in employment contracts are enforceable under Section 16601 when executed in connection with the sale of a business or ownership interest.
Labels: Source-linked, Medium, investigate
The California Court of Appeal held in Haight, Brown & Bonesteel v.
The California Court of Appeal held in Haight, Brown & Bonesteel v. Superior Court (1991) that an agreement compensating a firm for the loss of business when a withdrawing partner takes clients is not void as against public policy.
Labels: Source-linked, Medium, investigate
The California Supreme Court established in Gordon v.
The California Supreme Court established in Gordon v. Landau (1958) that customer list non-solicitation covenants for route salesmen are enforceable.
Labels: Inferred, Low, investigate
California Business and Professions Code § 16600 generally voids contracts that restrain individuals from eng…
California Business and Professions Code § 16600 generally voids contracts that restrain individuals from engaging in a lawful profession, trade, or business, but statutory and judicial exceptions exist.
Labels: Source-linked, Low, investigate
In South Bay Radiology Medical Group v.
In South Bay Radiology Medical Group v. Asher (1990), the California Court of Appeal affirmed that a partnership clause conditioning capital account and goodwill payments on a withdrawing medical partner’s refraining from competing in the county is valid under Section 16602.
Labels: Source-linked, Medium, investigate
The California Court of Appeal in Blue Mountain Enterprises, LLC v.
The California Court of Appeal in Blue Mountain Enterprises, LLC v. Owen (2022) ruled that a customer non-solicitation covenant in a CEO's employment agreement is enforceable under Section 16601 following a corporate reorganization.
Labels: Source-linked, Medium, investigate
The Ninth Circuit Court of Appeals held in IBM v.
The Ninth Circuit Court of Appeals held in IBM v. Bajorek (1999) that a clawback provision does not violate Section 16600 because it does not stop the employee from working for a competitor, but rather requires them to pay for the privilege.
Labels: Inferred, Medium, investigate
The Delaware Court of Chancery noted in 2019 that under Labor Code § 925(e), California's public policy again…
The Delaware Court of Chancery noted in 2019 that under Labor Code § 925(e), California's public policy against noncompetes is subordinate to party autonomy when the employee is represented by legal counsel.
Labels: Source-linked, Medium, investigate
In Vacco Industries, Inc.
In Vacco Industries, Inc. v. Van Den Berg (1992), the California Court of Appeal upheld a noncompetition agreement binding a minority shareholder (3%) who sold his equity concurrently with a buyout.
Labels: Source-linked, Medium, investigate
The California Court of Appeal held in Loral Corp.
The California Court of Appeal held in Loral Corp. v. Moyes (1985) that a restriction on soliciting former co-workers is not a significant restraint on engaging in a profession and is not void on its face under Section 16600.
Labels: Source-linked, Medium, investigate
The California Supreme Court held in Swenson v.
The California Supreme Court held in Swenson v. File (1970) that a noncompetition agreement among accounting partners is not entirely void and is enforceable to the extent reasonably necessary to protect the plaintiff's interest within the territory permitted by Section 16602.
Labels: Source-linked, Medium, investigate
The California Court of Appeal, Second District, held in 1976 that it is unfair for a seller of business good…
The California Court of Appeal, Second District, held in 1976 that it is unfair for a seller of business goodwill to engage in competition that diminishes the value of the asset sold.
Labels: Source-linked, Medium, investigate
Under the 'narrow restraint' doctrine applied by the Ninth Circuit in 1987, contractual restrictions that res…
Under the 'narrow restraint' doctrine applied by the Ninth Circuit in 1987, contractual restrictions that restrain an employee from only a small or limited portion of their trade or profession do not violate Section 16600.
Labels: Inferred, Medium, investigate
The Delaware Court of Chancery ruled in 2020 that a noncompete agreement was enforceable against a California…
The Delaware Court of Chancery ruled in 2020 that a noncompete agreement was enforceable against a California resident because the employee was represented by counsel during negotiations.
Labels: Source-linked, Medium, investigate
In Fillpoint, LLC v.
In Fillpoint, LLC v. Maas (2012), the California Court of Appeal held that a noncompete in an employment agreement executed as part of an M&A transaction is valid to protect acquired goodwill.
Labels: Inferred, Medium, investigate
In Fowler v.
In Fowler v. Varian Associates, Inc. (1987), the California Court of Appeal ruled that an agreement preventing an employee from assisting a competitor while still employed is not void under Section 16600.
Labels: Source-linked, Medium, investigate
In Cubic Corp.
In Cubic Corp. v. Marty (1986), the California Court of Appeal, Fourth District, held that invention assignment agreements do not restrict an employee's ability to engage in a lawful profession.
Labels: Source-linked, Low, investigate