An employee in California cannot be compelled by an agreement with his employer to limit his right of re-employment in the industry. The invalidity of such “non-compete” agreements is soundly fixed in California case law. A recent federal case in California however explores the sometimes overlapping and opposing interests of the employee and employer where the employer has a “trade secrets” agreement.
Calfornia courts uphold trade secret agreements, and will issue orders specifying the limitations of an employee’s use of confidential information. A recent case [See full opinion below] has held that a “team member” [i.e., employee] can be restricted in contacting the other “team member’s” [i.e., “employer’s] clients when those clients were provided with newly developed software created by the efforts of both team members. The restriction was not a restraint of free competition, but was a restriction necessary, according to the court, to protect the trade secrets of the “team member” [employer] who owned the rights to the software.
