Q: California enforcement of non-solicitation contracts by an LLC?
I am employed, in CA, "at will" with a Limited Liability Company, SSG, that provides services to schools. I am hourly. I signed a No Solicitation agreement- that I wont accept employment, with the client (school) I have been assigned, during and 2 years after termination. I signed this and didn't realize it. I applied with the County Office of Education (the client I was assigned) after 3 months working with SSG. The county also has a contract with the LLC- not to hire its employees during and 2 years after contract. County gave me interview and called my employer for reference. My job then called me and explained contract and insinuated I couldn't take job unless the county paid them some given dollar amount.
I have read a ton on this and I understand how California treats these contracts. HOWEVER, the company is an LLC and I read contracts may be enforceable for LLC "members" and "partners" and/or similar info? Is the contract between my employer and the county enforceable?
A:
Business and Professions Code section 16600 makes unenforceable any contract that limits your ability to carry out your profession. Non-solicitation and non-compete provisions in contracts are therefore unenforceable, and any new employer that determines not to hire you based on knowledge that such an unenforceable provision is in a prior agreement can be subject to liability.
B&P section 16600 does have a few statutorily defined exceptions that are quite narrow in scope. They related to when someone who owns all or part of a business sells that business including its goodwill. Only then can such a provision be enforceable. That is probably what you read about.
Good luck to you.
A: Non-solicitation and non-competition agreements are not enforceable (i.e., cannot be enforced in court) against employees in California. However, those agreements are valid against business owners and the businesses themselves (corporation, LLC, etc.) in some circumstances. For example, it is common for temp agencies to include a clause in their contracts that says, in essence, we will provide you with a temporary worker but, if you hire the worker away from us, you will owe us money (often called a “finder’s fee”.) In your case, it’s possible the school would have to pay your current employer if the school hires you, but the only way a lawyer would be able to tell you if that’s true would be to read the contract. Each contract has different words and those words set out the agreement reached between the two people/businesses.
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