NON-COMPETE PROVISIONS IN AN EMPLOYMENT AGREEMENT ARE NOT ABSOLUTELY BARRED UNDER CALIFORNIA LAW

By Timothy K. Cutler

 

The general principle of California law is that non-competes in employment agreements are not enforceable. However, a California employee can be subject to an enforceable non-compete agreement if the agreement is subject to the laws and jurisdiction of a state that enforces non-compete agreements. Although an employer cannot succeed on a suit in California to enforce a non-compete agreement (under California law such a suit would be dismissed), an employer can seek to obtain a judgment in the state that the agreement provides has jurisdiction. Upon obtaining a judgment in that state, an employer can then bring the judgment to California and request the courts of California to enforce the judgment. Under the doctrine of the full faith and credit due judgments, the California courts are required to honor and enforce judgments entered by courts of other states, even though such a judgment could not be legally entered originally in California. 

Thus, savvy employers with legitimate offices outside of California can provide that any disputes arising with regards to a non-compete agreement regarding its California employee shall be subject to the laws and jurisdiction of the state in which one of its other offices is located (assuming that state enforces non-compete agreements). Then, if a problem arises with regards to the enforcement of the agreement, the employer can file suit in that other state and seek to obtain a judgment. Upon obtaining the judgment, the employer then returns to California and requests the California courts to enforce the judgment. The California courts are accordingly obliged to enforce the judgment under the doctrine of the full faith and credit due judgments.