Non-Compete Clause

A Non-Compete Clause is a contractual agreement between an employer and an employee that restricts the employee from engaging in activities that compete with the employer’s business for a specified period of time and within a certain geographical area after the employment ends.

Examples:

• An employee agrees not to work for a competing company within a 50-mile radius for two years after leaving their current job.
• A software developer agrees not to create similar software products for five years after their employment with a tech company ends.

Cases:

• Edwards v. Arthur Andersen LLP: The California Supreme Court ruled that non-compete clauses are generally unenforceable in California, emphasizing the state’s strong public policy favoring employee mobility.
• BDO Seidman v. Hirshberg: The court upheld a non-compete agreement, stating that it was reasonable in duration and geographic scope, and served to protect legitimate business interests.