The relationship between employers and employees is governed by a complex interplay of legal rights and obligations. When an employer terminates an employee for refusing to sign a non-compete agreement, it raises important questions about the legality of such actions.

Understanding Non-Compete Agreements

1. Nature of Non-Compete Agreements:

A non-compete agreement is a contractual arrangement wherein an employee agrees not to engage in competitive activities with their former employer for a specified period and within a defined geographical area after leaving the company.

2. Legal Considerations:

Non-compete agreements are subject to legal scrutiny, and their enforceability varies across jurisdictions. In California, non-compete agreements are disfavored and are subject to very strict limitations under state law.

California’s Public Policy Against Non-Competes

In California there is a strong public policy against the restraint of people from engaging in a lawful profession, trade, or business of any kind. This fundamental public policy is reflected in California Business and Professions Code Section §16600 which states as follows:

“(a) Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.
(b)(1) This section shall be read broadly, in accordance with Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception in this chapter.
(2) This subdivision does not constitute a change in, but is declaratory of, existing law.
(c) This section shall not be limited to contracts where the person being restrained from engaging in a lawful profession, trade, or business is a party to the contract.”

The Case of D’sa v. Playhut, Inc., (2000) 85 Cal. App. 4th 927

The employee in D’sa v. Playhut, Inc., (2000) 85 Cal. App. 4th 927 filed a wrongful termination action against his employer and its administrative services provider, alleging that the defendants violated public policy when they fired him based on his refusal to sign a confidentiality agreement that contained an illegal covenant not to compete. On appeal, the Court of Appeal held that the termination of the employee constituted a wrongful termination in violation of public policy.

Violation of Public Policy

Therefore, in California, terminating an employee for refusing to sign an invalid or unenforceable non-compete agreement may be considered a violation of public policy. Employees have the right to engage in lawful professions and businesses and enforcing an unlawful non-compete could be deemed contrary to public policy.

Legal Recourse for Employees

1. Consultation with an Employment Attorney:

Employees facing termination for refusing to sign a non-compete agreement should seek legal counsel promptly. An employment attorney can assess the specific circumstances, evaluate the enforceability of the agreement, and determine the viability of a wrongful termination claim.

2. Documenting the Situation:

It is helpful when employees document instances related to the non-compete agreement, including communications with the employer, reasons for refusal, and any subsequent adverse employment actions taken against them.

Akopyan Law Firm, A.P.C. Stands Ready to Help

Navigating non-compete agreements and wrongful termination claims requires a nuanced understanding of California’s unique legal landscape. While non-compete agreements are generally disfavored in the state, employees who face termination for refusing to sign such agreements may have grounds for a wrongful termination claim. Seeking legal guidance is paramount to understanding one’s rights and pursuing appropriate legal recourse in these complex situations.

With offices in Los Angeles, Orange, Riverside, and San Bernardino, Akopyan Law Firm, A.P.C. serves clients across Southern California. Akopyan Law Firm, A.P.C. serves clients across Southern California. Our testimonials and case results speak to our experience and how we protect employee rights. Employees in Southern California involved in a dispute regarding non-compete agreements should contact our experienced employment lawyer. We stand ready to help and offer a complimentary case evaluation.