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Non compete and exclusivity clauses in professional California work contracts...

Moorpark, CA |

Hello,
I own a medical practice in a very competitive area. Because so much competition, I wonder whether I can legally add a non-compete clause in our employee contract. I would want the doctor to exclusively work for my hospital or work for none of my competition within the same town. In addition, if the employee quits or employment is terminated, I would add in our contract, the former employee can not work in the same town or within the maximum legally allowed radial distance from my practice. I am assuming the latter would only be allowed for a maximum amount of time? So, is all or any of the above legal and enforceable in California? If so, what is the usual cost to draw up an employee contract?

Attorney Answers 4

Posted

No, what you want to do is not legal in California. California Business and Professions Code section 16600 provides, essentially, that you cannot enforce a contract that effectively restrains someone's ability to carry on their trade. The courts have determined that code section means that non-competition provisions in an employment contract are unenforceable. In fact, knowingly putting an unenforceable non-competition provision in an employment agreement and requiring employees to sign it to get a job can be considered an unlawful business practice.

In essence, an employer cannot prevent a former employee from fairly competing against them. That said, there are ways that employers can try to limit former employees from unfairly competing against them. Confidentiality provisions are still enforceable to a certain extent. Trade secret restrictions can still be enforced if you have taken reasonable efforts to make certain critical data a trade secret. There are also certain risk management techniques you can use internally to protect against unfairly competing former employees.

It would be very prudent for you to find an employment attorney with whom you are comfortable and to have that attorney help you draw up legally enforceable agreements, and to create internal protections to give you the best fighting chance to prevent unfair competition from former employees. Ultimately, you cannot prevent them from competing, but you can do many things to limit what can be done.

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.

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Posted

Generally, under Section 16600 of the California Business & Professions Code, non-compete agreements are illegal in California. There are very narrow exceptions, found in Section 16601, which involve dissolution of or disassociation from a partnership, or as part of selling an interest in a business, or related to dissolution of a limited liability company. There is a strong public policy in California against non-compete agreements, and the right of people to gainful employment

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Posted

I agree in general with what my colleagues have said. It is legal, however, to prevent a *current* employee from working for competitors. That part of what you've asked would be perfectly legal.

Sincerely,
Craig T. Byrnes
www.ctblawfirm.com
310-706-4177

Disclaimer: Please be aware that I am not offering legal advice, nor forming an attorney-client relationship with you. I am not representing you, nor doing anything to protect your legal rights. If you believe that you have suffered a legal wrong, take action before any statute or limitations expires, or your right to do so may be lost forever. Good luck in your legal matter.

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Posted

Although non competition clauses are rarely upheld in California, non solicitation agreements are often upheld. Non solicitation agreements are often have the restrictions preventing the other party from contacting your patients and advise them that the other party is operating out of a new establishment.

The above is not legal advice. It is an illustration of options that can be used in certain situations. I have not examined all of your facts, if I did I might provide a different response.

The above is not legal advice. It is an illustration of options that can be used in certain situations. I have not examined all of your facts, if I did I might provide a different response.

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