Intellectual Property Law

Broad Non-Hire Clause Covering All Employees of Temp Agency Was Unenforceable Under California Law

Summary: A broad contract preventing an employer from hiring any former employee of the plaintiff temporary agency without paying a fee was an unenforceable non-compete under Business and Professions Code section 16600.

California Court of Appeal Holdings:

• California Business and Professions Code section 16600 which 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? rendered the contract unenforceable.
  


• The court distinguished cases allowing narrower non-compete agreements, and summarized its holding as follows:

  "Again, we take no position on whether a more narrowly drawn and limited no-hire provision would be permissible under California law. Paragraph 6, however, is in no sense narrowly drawn ? it is a very broad provision covering not only solicitation by Star Trac, but all hiring, and it applies to all VLS employees, regardless of whether they worked for Star Trac or were even employed at the time. Such a broad provision is not necessary to protect VLS?s interests and is outweighed by the policy favoring freedom of mobility for employees. It is therefore unenforceable."

Full post as published by IP Law Observer on November 28, 2007 (boomark / email).