Non-Compete Agreements and Their Role in Business
As an employer in Los Angeles, having an employee leave and start to work for a competitor can be very detrimental, and you may worry that your former employee is giving your competitor information about the way you do business. Trade secrets can be essential to the success of a business venture, large or small. Generally, trade secrets involve confidential information about a fact essential to a business. Examples of the types of products or processes that could be considering trade secrets include the following:
- A recipe
- The formulation of a product or material
- A manufacturing process
- An algorithm
- A research method
In LA, trade secrets can reflect a tremendous investment of time and money, and maintaining confidentiality may be essential to the success of a business. As a result, many employers attempt to protect themselves by entering into non-compete and non-disclosure agreements with their employees. Non-disclosure agreements are either separate contracts or agreements within another contract that limits what an employee may disclose to a third party. Generally, these agreements seek to limit disclosure of information gathered in the course of employment regarding a company’s trade secrets. Similarly, a non-compete clause seeks to limit who an employee may work for or with after leaving a particular employer.
California courts have been historically hostile to agreements that limit an employee’s ability to enter into new contracts with other employers. As a result, most non-compete clauses will be deemed invalid under California law, except in very specific circumstances. It is important for both employers and employees who have non-compete clause issues to consult with an experienced employment law attorney as soon as possible.
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