Each new skilled worker that you add to your team will help grow your company’s operations. Unfortunately, when they decide to part ways with your business, their actions could cause significant financial issues for the company. Former employees can become your worst competitors and can do real harm to your company’s operations.
A former worker who has quit their job could try to recruit their former co-workers to come work at their new place of employment or the competing company that they start on their own. They could also potentially take their client contact information and try to get the companies and individuals that currently hire your business to work with them instead.
California has laws against enforcing non-compete agreements, so although you can include them, you can not expect the courts to uphold them. Since you cannot use non-compete agreements in a California employment contract, there are only a few options for protecting your business. A non-solicitation agreement could be a good solution.
How a non-solicitation agreement works
Just like other restrictive covenants, a non-solicitation agreement is part of an employment contract. Employees agree that they will not try to hire people from within the company or solicit them for employment. They also agree not to try to take away clients or customers by soliciting them for business.
Like any other restrictive covenant included in an employment contract, a non-solicitation agreement typically necessitates some kind of valuable consideration for the worker who gives up some of their rights. It will need to include reasonable restrictions on how long you can enforce it.
Unlike non-compete agreements which the California courts will not enforce even when someone is clearly attempting to unfairly compete with a former employer, non-solicitation agreements may be enforceable. You can either obtain a court injunction preventing them from continuing to harm your company or even connect with financial compensation for their previous misconduct.
Your employment contracts are your first line of defense
Negotiating an employment contract isn’t just about helping your company bring in the best new talent. It is also about protecting your company from the possibility of future misconduct. Understanding California employment laws and the restrictions they place on you as an employer can help you better protect your business when onboarding new talent.