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Can an employer terminate me if I refuse to sign a non-disclosure and non-compete agreement?

San Francisco, CA |

I have been with my current employer for 2 years now, in California. Just recently (last week) I was asked/forced to sign a non-disclosure and non-compete agreement (this is the first NDA, NCA I have ever been given during my employ). I requested more time, beyond the 1 week deadline and they refused, well they gave me until today to sign or face termination.

One of the provisions in the agreement affects my future employment as it precludes me from being employed within the same area of employment I'm currently in, should I leave my current employer. This is why I'm refusing to sign the agreement, but I don't want to lose my job either.

Attorney Answers 5

  1. I appreciate your question is linked to a real-life concern.

    A non-compete is not enforceable except against an owner in connection with the sale of a business, including good will. It would not be enforceable in Calfiornia against a non-owner, non-director, non-officer employee of a business entity under the current state of California law.

    Knowing that this is an "at will" employment state not enjoying the most robust economy, you can decide what to sign or not. Avvo is for analysis not legal advice per the terms of use and my disclaimer.

    The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.

  2. In California, non-compete agreements are legally unenforceable and against public policy (Business and Professions Code, section 1660). California case law has held that employers who terminate employees because they refuse to sign a non-compete agreement, are liable for damages fr wrongful termination. Non-disclosure agreements are different and may be legal if drafted properly.

    Even though you have been coerced to sign the agreement, it still may not be enforceable because of the substance and process in getting it signed. But you really should consult with an employment law attorney in your area, for a true legal opinion and to discuss what option you have to address these issues.

    They say you get what you pay for, and this response is free, so take it for what it is worth. This is my opinion based on very limited information. My opinion should not be taken as legal advice. For true advice, we would require a confidential consultation where I would ask you questions and get your complete story. This is a public forum, so remember, nothing here is confidential. Nor am I your attorney. I do not know who you are and you have not hired me to provide any legal service. To do so would require us to meet and sign written retainer agreement. My responses are intended for general information only.

  3. Restrictions on competition are generally unenforceable in the state of California. Business and Professions Code section 16600 states: "Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void."

    There are some narrow exceptions involving the sale of a business (to protect people who purchase a business from having the previous owner turn around and immediately compete with them) and the disclosure of trade secrets. Here is the relevant law for your reference:

    Since non-competes are invalid in the state of California, it doesn't matter whether you sign one--provided you do so in the state of California, it will generally be void and unenforceable.

    NDAs are generally legal, and an employer can condition continued employment on the signing of an NDA, assuming employment is "at will."

    Keep in mind the above is not legal advice. I would strongly recommend that you pay an attorney to review the specifics of your proposed agreements to determine your rights.

    Best wishes.

    This answer is a general interpretation of the law and is not fact specific to your case. Likewise it does not create an attorney-client relationship. You should seek an attorney for a review of your specific facts and documents.

  4. I would like to add a word of warning. Pure non-compete provisions are unenforceable in California, but non-disclosure, non-solicitation and confidentiality provisions are still fully enforceable. Therefore, even in the absence of language that expressly precludes you from working for a competitor, your ability to use information that may be considered confidential can still be severely limited.

    Perhaps more importantly, remember that most other jurisdictions in the United States allow non-compete provisions to be enforceable as long as they are narrowly tailored and reasonable. That means that if your company is located in a state other than California, and it can establish that the laws of that state control your agreement (as through a choice of law provision) then the employer can get a declaratory judgment in its state and enforce it in CA.

    Good luck to you.

    This answer should not be construed to create any attorney-client relationship. Such a relationship can be formed only through the mutual execution of an attorney-client agreement. The answer given is based on the extremely limited facts provided and the proper course of action might change significantly with the introduction of other facts. All who read this answer should not rely on the answer to govern their conduct. Please seek the advice of competent counsel after disclosing all facts to that attorney. This answer is intended for California residents only. The answering party is only licensed to practice in the State of California.

  5. Now that you have read the response of lawyers in agreement, I suggest that the answers you seek are more "strategic" than legal.

    Best to contact an experienced lawyer off-line to review all of your options.

    David Mallen

    David A. Mallen offers answers on Avvo for general information only. This offer of free, general answers is not intended to create an attorney-client relationship. If you need specific advice regarding your legal question, you should consult an attorney confidentially. Many experienced California labor and employment attorneys, including David A. Mallen offer no-risk legal consultations to employers and employees at no charge. David A. Mallen is licensed to practice law before all state and federal courts in California, as well as the California Labor Commissioner and the California Unemployment Insurance Appeals Board. Failure to take legal action within the time periods prescribed by law could result in the loss of important legal rights and remedies.

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