Non-Competition Agreements vs. Non-Disclosure Agreements–What’s legal in California? Both? Neither?
The customer lists, business practices, business plans, and much of the information which one uses to run a business are all trade secrets. Keeping that information confidential and out of the eyes of a competitor or the public is legal.To protect trade secrets and other proprietary data companies may require all employees to sign confidentiality agreements, also known as non-disclosure agreements or “NDA’s.” These are agreements that should be signed on the first day of employment by every employee who has access to any proprietary data. A copy should also be included in an employee handbook.
In contrast in California, non-compete agreements are automatically void as a matter of law, except for a small set of specific situations expressly authorized by statute most commonly when equity stakeholders in businesses (that means persons with an “ownership interest” agree to non-competition clauses. (California Business and Professions Code Section 16600). Very few employees have ownership interests and therefore, non-competition agreements are void in California.
If your business needs to protect its customer lists, business practices, business plans call for a free consultation. Or, if members of a business concern desire to ensure that none competes against the concern call us and we’ll explain your rights.
Los Angeles business lawyers at the Law Offices of Galen Gentry Can Help.