These days, it is common for companies headquartered or principally located in one city and state to have multiple offices and employees throughout many cities and states in the country, and even the world. Companies in this position will often require their employees to sign contracts with both forum selection clauses and choice of law provisions. The forum selected is usually where the company is headquartered or principally located. Likewise, the choice of law provision often calls for application of the laws of the forum state. Companies have a strong interest in uniformity and predictability when it comes to legal disputes. Litigating matters in different courts throughout the country under different laws is not something that is desirable or productive.
In situations where employers also make their employees, or certain employees, agree to restrictive covenants, particularly noncompetes, companies expect the same uniformity and predictability regarding their enforceability as to each employee, regardless of where the employee works or lives. Employees, on the other hand, often expect (as we learned through a recent case) that even with another state’s choice of law provision, they will still be afforded the protection of the laws of their own state. This disconnect is no clearer than where non-California headquartered companies hire California residents as employees and require them to sign noncompetes governed by another state’s law. In California, noncompete agreements are generally unenforceable (with some limited exceptions). This is well-known, particularly by California residents. So, what happens in this situation if the California employee violates their noncompete?
California Prohibits Employers From Enforcing Noncompetes
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