Monday, August 11, 2008

What It Is Like to Ban Non-Compete Agreements

From comesCalif. High Court Brightens Rule Against Non-Compete Pacts
In Edwards v. Arthur Andersen, S147190, the unanimous court held that a state statute with roots in 19th century laws gives California workers great freedom to switch jobs, to compete against old employers and to solicit former clients.

"In sum, following the Legislature, this court generally condemns noncompetition agreements," Justice Ming Chin wrote. "Under the statute's plain meaning, therefore, an employer cannot by contract restrain a former employee from engaging in his or her profession, trade, or business unless the agreement falls within one of the exceptions to the rule."

The ruling creates a new "bright line" for employers, said Richard Frank, chair of Cooley Godward Kronish's international employment practice, who was not involved in the case. "All agreements that don't fit into one of the statutory exemptions are by virtue of this decision void," Frank said.

With its decision in Edwards, the court rejected recent 9th Circuit findings that California's Business and Professions Code §16600 contained a "narrow restraint" exception that allowed companies to use non-compete agreements so long as the pacts only restricted "a small or limited part" of their employees' future ability to work.

No, Indiana has no such statute, and -as my other articles here show - Indiana courts do not favor them. This means that each non-compete agreement must be reviewed on their own terms.