Employment contracts and severance agreements are vital legal documents. A severance agreement is typically a separate agreement outlining terms of separation between employer and employee. However, among the various provisions within these agreements, post-employment restrictions, particularly non-compete and non-solicitation clauses, warrant fiercely meticulous consideration. In California, where such clauses face stringent legal scrutiny, understanding their implications is paramount for employees.
Defining Non-Compete Agreements
Non-competes, also dubbed as restrictive covenants, are conditions employers may insert in employment contracts to limit employees’ ability to work for a rival or start a competing business after they leave their jobs.
California’s non-compete clauses are generally weak in enforcement under Business and Professions Code §16600. Via this section, employers cannot stop or discourage employees from following their chosen profession or trade after leaving their companies. However, there are exceptions, such as agreements related to the sale of a business or the protection of a company, employer, or entity’s proprietary information.
When you are propositioned a severance agreement containing a non-compete clause, critically inspecting each term is vital. You must confirm that the restrictions imposed are reasonable in capacity and duration–after all, you will have to live with them once you sign. If the conditions within the clause seem too broad, vague, or restrictive, seek professional legal direction to understand your options.
Deciphering Non-Solicitation Provision
On the opposite end of the employment agreement spectrum, non-solicitation clauses forbid you from soliciting or appealing to your former employer’s clients or customers after leaving a company. These clauses are intended to shield the employer’s relationships and associations and prevent unfair competition.
California’s non-solicitation clauses are similar to its non-compete clauses concerning scrutiny. Although typically incapable of enforcement, if these agreements unduly restrict your ability to work in your occupation, they may be valid if narrowly fitted to protect legitimate business interests.
Before agreeing to a non-solicitation provision, review the terms and implications. Reviewing these agreements with a San Bernardino severance agreement lawyer specializing in California employment and contract law is always the wisest. You must ensure the contract does not unduly restrict your ability to find new employment or engage in lawful business activities. Reach out for legal guidance, especially if you need clarification about the condition’s function or extent.
The Employees Rights
When it comes to post-employment restrictions, you need to understand your rights and your options. Although these agreements usually include non-compete, non-solicitation, or both, you do have the right to negotiate. You can negotiate the terms or refuse to sign the document if it’s too restrictive.
Employers in California can also not retaliate against you for your refusal to sign an unenforceable non-compete or non-solicitation clause. Remember, these agreements are written first with the employer’s best interest in mind.
Other Conditions Influencing Post-Employment
Aside from restrictive covenants or non-solicitation clauses, a savvy Southern California professional knows there are other conditions to consider when departing an employment position. Non-disparagement agreements prevent employees from talking in a negative light about the company, its business, and more. However, they are void if the employee reasonably believes what they report or otherwise reveal about the company or its actions are unlawful. The confidentiality clause, likely found within your employment contract, contains many boundaries and provisions that can significantly impact your rights and life post-employment.
The Implications of Confidentiality Clause Provisions
Also called non-disclosure agreements, confidentiality clauses prohibit employees from divulging trade secrets. To illustrate the implications of such a clause, let’s look at a hypothetical yet plausible real-world scenario.
After five years, a software engineer resigns from a Silicon Valley tech firm to pursue a startup opportunity. However, the employee had previously agreed to a confidentiality clause that drafted their obligation to protect the company’s proprietary information and trade secrets. In the name of diligence and to protect their legal standing, reputation, and career vitality, they must carefully consider their obligations to their former employer under the signed non-disclosure agreement.
The practical application of the confidentiality clause in this scenario includes multiple diverse characteristics.
Data security duties may be included in the clause. The employee is expected to return company devices, delete personal files, and ensure no confidential data remains accessible to the departing employee.
Another obligation could be a handover process where the employee collaborates with their team for a smooth project transition, sharing confidential info with only the necessary team members or on a need-to-know basis. After leaving a company, post-employment responsibilities include refraining from disclosing confidential information to any third parties, especially competitors or potential employers. Further, the employee must assume intellectual property protections, avoiding using company secrets in their own intended startup and ensuring no infringement on the company’s intellectual property rights.
A breach of the confidentiality agreement can lead to serious legal action, including lawsuits and injunctive relief, such as a court order. Adhering to the confidentiality clause demonstrates professionalism, ethical standards, and respect for the other’s intellectual property. However, are there any circumstances that justify breaching the agreements, clauses, and legal documents discussed above?
When Breaking the Terms of an Agreement May be Might be Warranted
Before we get into what may warrant a breach of any of the legal documents outlined, it is crucial to understand that you should consult with a legal professional specializing in employment law before doing so. In specific scenarios, as an employee, you may be compelled to breach your confidentiality agreement or related legal document despite the contractual responsibilities. While these agreements are typically binding and enforceable, there are ethical, legal, or personal considerations that can warrant deviation, including, but not limited to, the following:
- Whistleblowing and Legal Obligations: If employees become aware of illegal activities, fraud, or unethical behavior within the company, they may be legally obligated to report such misconduct to regulatory authorities or law enforcement agencies. In such conditions, breaching your confidentiality agreement to disclose information in the public’s interest and safety could be justified and even protected under California and Federal whistleblower regulations.
- Protection of Personal Safety: If an employee believes that compliance with the terms of their non-disclosure agreement poses a risk to their safety or the safety of others, they may be justified in breaching the terms. For instance, disclosing information to prevent harm may be ethically justifiable should an employee become aware of potential damage or hazard to consumers due to a product defect.
- Contractual Violations by Employer: If an employer breaches other provisions within an employment contract, like failing to deliver promised compensation, a safe work environment, or benefits, the employee could argue that the breach essentially voids the agreement or releases them from their obligation under the agreement.
- Protecting Legal Rights: Breaking a non-disparagement agreement to address injustice in the form of unfair treatment or discrimination can be necessary. California Government Code §12964.5 clearly expresses that non-disparagement and separation agreement clauses are not permitted to muzzle an employee from speaking up against harassment, discrimination, unlawful acts, retaliation, or conduct reasonably believed to be illegal.
What is the role of a severance agreement attorney in these matters?
Leaving your current job, whether to pursue the next step in your career or escape a negative employment experience, may seem overwhelming, especially with many potential post-employment restrictions. Severance agreements that include non-compete and non-solicitation clauses can be particularly challenging. A severance agreement attorney who specializes in labor laws and contract law can ensure your rights are protected.
Employers may try pressuring you to accept restrictive terms of severance agreements, but you have the right to analyze the provisions in the document. Alternatively, an employer may endeavor to unduly silence you under a confidentiality clause or threaten to take legal measures against you should you break your silence under a non-disparagement agreement despite their unlawful business conduct. A skilled San Bernardino severance agreement attorney can comb through the agreement’s terms, assess their application, inform you of your options, and advise you of the most suitable course of action. To negotiate the contract’s terms or when seeking legal action to challenge oppressive restrictions or unethical practices, your severance agreement lawyer will support you, advocate for your interests, and help you achieve a favorable outcome. Contact an experienced San Bernardino severance agreement attorney by calling us at 909 884-6451 for a confidential and free consultation.
