Are California Compete Agreements Valid in the Employment Context?
An employer cannot lawfully make the signing of an employment agreement, which contains an unenforceable covenant not to compete, a condition of continued employment, even if such agreement contains choice of law or severability provisions which would enable the employer to enforce the other provisions of the employment agreement. An employer’s termination of an employee who refuses to sign such an agreement constitutes a wrongful termination in violation of public policy. The California Business & Profession Code invalidates provisions in employment contracts prohibiting an employee from working for a competitor after completion of his employment, or imposing a penalty if he does so, unless they are necessary to protect the employer’s trade secrets. However, a covenant not to compete in an employment agreement will not be viewed as a violation of California law if the covenant not to compete is necessary to protect the employer’s trade secrets since companies have the right to protect proprietary and property rights which are subject to protection under the law of unfair competition. If a contract is capable of two constructions, courts are bound to give such an interpretation as will make it lawful, operative, definite, reasonable and capable of being carried into effect.
What if my Employer Verbally Promised Me that My Employment is Not Subject to the At-Will Rule in California?
When employees sign an employment agreement with their company, as a general rule, the terms of the agreement are usually binding on both the employer and the employee as long as their is consideration, an offer and acceptance. If an employer subsequently promises an employee something that is not included in the employment agreement, the promise does not necessarily become part of the contract due to the parole evidence rule. Under the parole evidence rule, anything that happens or is promised out of the contract is excluded. However, this can be overcome when the contract is ambigous as to certain terms. Ambiguities in employment agreements are construed against the party that drafted the employment contract, which is usually the employer. If the agreement is silent as to the at-will employment relationship, then it may be possible to present the evidence of the employer’s promise. Contact our employment law office today for a free consultation about whether or not you are an at-will employee.