In California - Don't Talk To My Employees!

Recently, in WeRide Corp. v. Huang, 2019 WL 143934 (N.D. Cal. April 1, 2019), the United Stated District Court for the Northern District of California invalidated an employee’s post-termination, non-solicitation provision.   In that case, employees were required to sign a one-year post-termination employee non-solicitation provision.  A former employee went to work for a competitor and allegedly solicited other WeRide employees to work at the competitor.  In ruling in favor of the employee, the court relied on Barker v. Insight Global, 2019 U.S. Dist. LEXIS 6523 (N.D. Cal. Jan. 11, 2019) and AMN Healthcare v. Aya Healthcare, 28 Cal. App. 5th 923 (2018) to conclude that “the clause...is void under California law.” Id.

Generally, California favors employee mobility (California Business and Professions Code § 16600) and generally treats restrictive covenants, including non-compete agreements (with limited exceptions), as unenforceable.  In the past, California courts held that, non-solicitation agreements are enforceable. See Loral Corp. v. Moyes, 174 Cal. App. 3d 268, 278–79 (1985). This court decision is one of three in the last six months where California state and federal courts have determined disagreed with that prior position.

Since it appears that California courts appear to be moving toward invalidating non-solicitation of employees provisions, Employers should reevaluate its non-solicitation provisions. Under the California Labor Code 432(a), no employer may require any employee or applicant for employment to agree, in writing, to any term or condition which is known by such employer to be prohibited by law. Violation of this provision is a misdemeanor under Section 433.

This article is not intended to provide legal advice for any particular situation, but is rather an overview of recent developments in California law.  The reader should not rely on any  information contained herein, but should seek appropriate legal advice from a qualified attorney.