Protecting Your Business: Can Another Company Poach Your Employees in California?
Businesses are only as strong as their relationships with their employees. Companies often put a lot of time, effort, and financial resources into identifying, hiring, and training their staff. You may want to know: Can another company take your employees? California is an at-will employment state that generally bars non-compete agreements in order to protect employee mobility. This means that businesses generally cannot prevent other companies from hiring away their employees, except in certain circumstances. Within this blog post, our Bay Area business lawyers explain the key things to know about California law on employment non-competes.
What to Know About California Law on Employment
To start, it is useful to understand how California law governs the relationship that businesses have with their employees. Here are two key things that business owners need to understand:
- At-Will Employment: Under California’s at-will employment standard, the employer-employee relationship is presumed to be voluntary. In other words, either party to the relationship can exit it wherever they see fit. An employee can opt to work for a competitor instead.
- Non-Competes are Generally Banned: Unlike most other U.S. states, California generally bars non-compete agreements. By statute, they are not enforceable. A business cannot require employees to sign a non-compete that prevents them from working for a competitor except in very limited circumstances.
California Law Provides Some Protection for Businesses
There are some protections for businesses under California law. For one, businesses cannot make a bad-faith raid of a competitor’s workforce to drive you out of business. There are also restrictions on a competitor’s ability to solicit your employees while they are on your premises or otherwise actively “on the job.” Nonetheless, businesses still have the right to recruit from competitors. There is nothing to stop a competing company from offering a more attractive compensation package to your employees to incentivize them to leave.
Options that Businesses Have for Protecting Themselves
Many businesses in California make significant investments in their staff. How can businesses actively protect themselves, considering California does not permit the use of non-compete agreements? A business has two primary options available:
- Employment Agreements: Although California is an at-will state, employers can use employment agreements to provide long-term incentives for employees to remain at the company for a longer period of time (for example, equity compensation or bonuses). Employment agreements with these types of long-term compensation arrangements can provide additional certainty to businesses.
- Non-Disclosure Agreements (NDAs): NDAs are permitted in certain situations in California. A business could use an NDA to protect certain sensitive information, such as training methods, commercial strategies, or trade secrets. Even if an employee leaves you, an NDA could prevent the former employee from sharing sensitive information with your competitors.
Consult With Our California Business Lawyers Today
At Coepio Legal, our California business law attorneys are committed to providing proactive, reliable, and solutions-driven legal services. Do you have questions about employee non-competes? Our team can help. Call us now or connect with us online to arrange a confidential consultation. With an office in San Francisco, we are well-positioned to serve communities throughout the Bay Area.
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