Can an out-of-state employer enforce a non-compete agreement in California?

On Behalf of | Jul 14, 2021 | Employment Law

California is home to numerous nationally-renowned businesses and small companies, but many out-of-state businesses also have branches or franchises in California. Those who work for a company started or run out of another state could face complications when it comes to state employment laws.

Companies started or headquartered in California will usually have employment policies that directly reflect California state law. Businesses from another state may have policies that don’t perfectly align with the California employment system, leading to confusion about what set of rules apply.

For example, a business based out of New York or Nevada might have non-compete agreements included in its employment contracts. Could that out-of-state company enforce the contract after the end of your employment in California?

All employers must adhere to California laws for California employees

Those who work in the state of California have the full protection of California employment laws. Companies that operate in other states can have different policies in those other states, but their practices must comply with California laws within the state of California. That rule affects the enforceability of your employment contract.

Your employer can use a boilerplate contract for all employees that includes a non-compete agreement. The mere inclusion of a restrictive covenant will not invalidate the employment contract. However, the company will usually not be able to ask the courts to enforce a non-compete agreement.

If you decide to go work for a competitor or start your own business, California law prevents your employer from penalizing you for your entrepreneurial spirit even if you signed a contract forbidding such actions. Understanding employment laws as they apply in California can be very important if you plan to make big moves in the near future.