The California Non-Compete Clause

This article, in PC World, highlights a significant change in California law, one that is bound to make some waves in employment law circles. The California State Supreme Court recently invalidated non-solicitation contracts, which employers had used to prevent employees from leaving the company with clients and other employees.

In Edwards v. Arthur Anderson, the court determined that non-solicitation clauses are no longer legal in contracts that apply to California residents. Note that the decision appears to preserve non-solictiation agreements in the context of a sale of a business or the sale of a significant portion of a company's stock.

We won't cover the details of non-compete clauses, which are similar, until Class 8, but this is a timely case to get you thinking about Employment Law. Don't worry about whether you understand the nuance or background of this case, but do think about what this could mean in other contexts and for potential clients. If you were an employer, does this impact where you do business? And with whom? Are there ways around this issue if a non-solicitation agreement is desired?