You are confusing issues of non-compete and at-will employment. You will be well served to meet with a local employment attorney to review your employment agreement.
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The terms of your employment contract are still valid although you now may be an at-will employee.
With respect to the non-compete agreement in nearly all cases they are invalid in California in the employee-employer context. You should be free to leave your employment without running afoul of the non-compete provision.
However, to be safe, I would suggest having an employment or labor law attorney review your employment contract to make certain it is governed by California law as California is in the minority of states that invalidate such provisions.
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No one can tell what your contract means without reading it in its entirety. For example, the term "Employee's employment" may be defined, or there may be language that says or indicates some terms persist. Other language may define the end of employment. And there may be many other provisions that have some bearing on the issue. Also, there may be employment policies or agreements that apply to you that are not stated in the contract you refer to.
If your original contract guaranteed you employment for one year and that year has passed, you may indeed be an at-will employee now. Please see my guide to at-will employment in California which should help you understand employment rights: http://www.avvo.com/legal-guides/ugc/a-short-summary-of-california-at-will-employment.
Employment law is complicated and fact-specific. You may wish to consult with an experienced plaintiffs employment lawyer. To find a plaintiffs employment attorney in California, please go to the web site of the California Employment Lawyers Association (CELA). CELA is the largest and most influential bar association in the state for attorneys who represent working people. The web site is www.cela.org. Click on "Find a CELA Member" and you can search by location and practice area.
I hope you can resolve your situation and wish you the best.
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These clauses are generally unenforceable in California with some exceptions.
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Some non-compete contracts in California employment contracts include a "choice-of-law" clause that selects the laws of another state to be applied if an employment dispute arises. California generally will not enforce non-compete clauses against employees. That is one reason why Silicon Valley started so many great companies.
Unlike California, many other States will enforce non-compete clauses.
So, once again, you are well-advised to talk to an experienced lawyer to protect your rights.
David A. Mallen
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The State of California has a strong public policy against agreements not to compete. Therefore, all non-competition agreements are presumed to be invalid. Limited exceptions to this rule include agreements not to compete on the sale of a business or dissolution of a partnership.
Even if your non-compete clause is invalid, you should be careful not to violate your employer's rights. For example, you cannot use your employer's trade secrets (client lists, ways of doing business, etc.) when starting your own business or working for someone else. You may be even more restricted if you have signed a confidentiality agreement. I would advise speaking with an attorney if you have any questions about whether the non-compete still applies or about the information you can and can't use in your next venture.
Non-compete provisions are common in employment related agreements, but they are usually unenforceable for public policy reasons. You should contact an attorney who can review your contract in its entirety and have a consultation to determine what your full legal rights may be.
Non-compete clauses are often drafted to provide that they "survive" termination of employment as well as termination of the employment agreement. However, in California, it is very difficult for an employer to enforce a non-compete against an employee. (While there are certain exceptions when a non-compete, I do not see any facts in your question which would lead to those exceptions. For example, it does not appear that you entered into a non-compete in connection with the sale of the business to the new employer). However, keep in mind that even if there is no non-compete agreement, it is illegal for an employee to use trade secrets of a former employer to unfairly compete with the the former employer.