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Proving a violation of a non-compete agreement

Non-compete agreements are important for companies who want to protect trade secrets, proprietary or confidential information, or even valued employees from being stolen from an employee who leaves and becomes employed by a competitor. To avoid these”stolen” trade secrets and other confidential information, companies will ask key employees to sign a non-compete contract. 

What is a non-compete agreement?

Non-compete agreements may be verbal, part of a written employment contract, or a separate document. It should include all the restrictions the company wants to protect, and both sides, the employer and the employee, must agree to them. Some of these restrictions are:

  • That the employee does not voluntarily leave the company to pursue employment at a competitor. This may include a time frame or specific competitors.
  • The employee may not share confidential information or trade secrets with any competitor.
  • The employee may not “hire away” specialized staff to a competitor. 

It is important to be as concise as possible in creating a non-compete agreement, including all sensitive areas of information.

Can a breach of a non-compete agreement be enforced?

The California Business and Professionals Section 1600 states that “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.”  This provision makes it difficult for employers to convince the court to enforce the non-compete agreement. However, there are things you can do. 

Though it is difficult to enforce a non-compete agreement in full, most courts recognize that trade secrets and other proprietary information are the property of the original company, and sharing that information, is a clear breach. You must be able to prove that the employee exhibited behavior in direct violation of the terms of the agreement. 

Examples of proprietary information are recipes or formulations, marketing strategies, customer lists, vendor contracts, etc. With the right amount of research, you may be able to prove the employee violated the agreement. 

What damages are awarded in non-compete cases?

If you can prove that a legal non-compete breach occurred, it will depend on the violation as to the award the court may grant. The most common is an injunction to prevent the employee from using or sharing the information. Monetary damages can be awarded as well if there was damage to your company as a result of the breach in the non-compete agreement.