Employees are bound by a duty of loyalty and they will usually sign an agreement to restrain from unfair competition after leaving their employment. The non-disclosure and non-solicitations agreement protects employers from an employee starting a new business or working in a business which is in direct competition and a chance to gain an unfair advantage over the employer by divulging and using confidential material. The confidential material can include sensitive information, client/customer lists, and other material related to trade secrets. It can be devastating for a company if an employee reveals the secrets of business practices, the research and launching of a new product, and the marketing techniques that a business uses.
Most agreements contain reasonable limitations to the period of time of the agreement to not compete and it can also include a specific geographical area. Except for California, most states in the U.S. recognize the validity of the non-compete and non-disclosure agreement with a few exceptions. Employers need to understand what types of non-competition and non-disclosure agreements are legal in California. Our Los Angeles employment counseling attorney can answer questions and draft comprehensive and valid agreements. The prominent labor law firm of Poole Shaffery has the resources and knowledge to deal with the various issues involved in the employer employee relationship.
From Santa Clarita, our team counsels businesses in Los Angeles County and throughout California—we represent our clients in high-stakes litigation and in day-to-day legal issues, keeping employers up to date as the laws change regarding employee handbooks and other issues related to the employment relationship.
Non-disclosure and non-solicitation agreements are illegal in California except in circumstances that involve selling partnerships or selling of ownership interests. The laws allow fair competition but protect trade secrets such as confidential customer/client lists. Aside from the exceptions "every contract by which anyone is restrained from engaging in a lawful profession trade, or business of any kind is to that extent void," per California Business and Professions Code § 16600. Any attorney with the firm can draft non-disclosure agreements for protection of vital trade secrets or revise as necessary contracts that are currently in use by employers. A non-disclosure or non-solicitation contract that contains provisions that are illegal may become void based on any unlawful language that it contains.
Non-disclosure and non-solicitation agreements place restrictions on the competition between partners in business relationships. A partner competing against another partner may have an unfair advantage and engage in unlawful competition. Unlawful competition does not include irregular or infrequent violations of the agreement, but it entails significant competition and it subjects the offending partner to liability. Common professions where partners need these types of agreements involve physicians and accountants.
A reasonable non-disclosure or non-solicitation agreement protects the interests of the company when company owners sell their substantial stock interest in the company. The agreement may remain in effect for a long period of time. When the owner sells the business or shares, part of the sale requirement may be the signing and implementation of the agreement.
It is important for businesses to rely on non-disclosure or non-solicitation agreements when possible. An employer cannot force an employee to sign an agreement on the condition of employment. It leaves the employer open for claims of retaliation against the employee. A Santa Clarita business lawyer with the firm can devise confidentiality agreements and assist in all aspects of non-disclosure and non-solicitations agreements. Businesses need protection and their attorneys can help.
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