Status of California Employee Non-solicitation Clauses Unclear

Attorneys may need to reevaluate their clients’ employee non-solicitation clauses after an appellate court ruled one of these clauses an improper restraint of trade under California law.

The court’s strict interpretation of the California Business and Professions Code resulted in a non-solicitation clause’s treatment as a de facto non-compete clause, prohibited by the Code. Repercussions of the decision are unclear, as ABA Section of Litigation leaders disagree whether this ruling casts doubt on all employee non-solicitation agreements in California.