Professional Service Agreement

Second Court Calls into Question Viability of Employee Non-Solicitation Agreements

February 11, 2019

The California Court of Appeal recently ruled that a broadly worded contractual clause that prohibited solicitation of employees for one year after employment was an illegal restraint on trade under California law. Now, a second court has joined in. The Northern District of California has reversed a prior order that dismissed claims that asserted a contractual employee non-solicitation provision was unlawful. In doing so, the Court held that contractual prohibitions barring solicitation of employees are invalid under California law. We recommend all employers consider having SESCO review and revise employment agreements and severance agreements to ensure compliance with federal and state law.