Protecting California businesses without non-competes

No California business wants an ex-employee to profit from confidential company information known as trade secrets. At the same time, former employees feel strangled by forced non-compete agreements that prevent them from working in a chosen career or launching a business of their own.

Non-compete contracts stipulate an employee cannot leave a company to work for a competitor within a certain distance for a set time. The agreements are a condition of employment. A typical contract may forbid an ex-employee from heading to or becoming a direct competitor within a 50 mile or greater radius for up to one year.

California is an exception among states where non-compete contracts are regularly enforced. Judges more often than not rule that California non-compete agreements are invalid. That makes sense for a state with a business philosophy that encourages entrepreneurship.

Although many states are rethinking the rigidity of non-compete contracts, nationwide enforcement of the agreements has grown significantly. Non-compete litigation is up more than 60 percent since 2002 by some estimates. About 760 cases reach U.S. courtrooms each year with an untallied number of settlements.

Since California courts invalidate most non-compete agreements, how do state businesses prevent one-time insiders from swiping trade secrets? The first step may be an attorney consultation to learn the meaning and limits of intellectual property as it applies to your business.

Trade secrets and other company assets must be defined and valued before a plan of protection is designed. Many companies have to come up with alternate defensive measures since the evidential burden and expense of lengthy trade secret disputes are considerable.

Many company officials are unsure of the boundaries between fair and unfair competition. An attorney or team of lawyers can assist business owners with intellectual asset identity, assessment and protection. Intellectual property advisers make sure businesses can shield property from potential thieves effectively and affordably.

Source: online.wsj.com, “Litigation Over Noncompete Clauses Is Rising” Ruth Simon and Angus Loten, Aug. 14, 2013