This is the third in a series of four articles discussing the DOJ’s settlement with six of Silicone Valley’s big high-tech companies. The settlement prohibits the companies from signing any Non-Solicitation of Employees agreement with any other company. However, the settlement did provide for certain exceptions to this general rule, some of which concur with California case law and others which extend beyond it.
Where the DOJ Settlement and California Law Agree
Although not a requirement under California law, the California courts would probably concur with the DOJ settlement's requirement that the non-solicitation agreements include a specific termination date or event and be signed by all parties to the agreement. In addition, the settlement's requirement that non-solicitation agreements clearly “identify the agreement to which it is ancillary” is not any stricter than those of California case law.
Where the DOJ Settlement Extends Beyond the Law
The DOJ settlement requires that all non-solicitation agreements be strictly drafted to affect only employees who are directly involved in the agreement and identify clearly the employees subject to the agreement. The Moyes court, on the other hand, validated a separation agreement that prohibited solicitation of all of the former employees without requiring any specific identification of employees subject to the agreement. The DOJ also settlement proscribed behaviors much broader than those prohibited by California law.
An Additional Twist in Non-Competition Agreements
Rosemary Silguero entered into a contract with Floor Seal Technology, Inc. (FST) that contained a clause prohibiting her from all sales for 18 months following her termination. After concluding her employment with FST, Silguero began working with Creteguard. FST contacted Creteguard and sought their cooperation in enforcing the non-compete clause that Silguero had signed with them. Cretegaurd terminated Silguero's employment.
Silguero brought a Tameny claim against Creteguard for wrongful termination, arguing that her firing violated public policy. The court agreed with Silguero that the "understanding" between FST and Creteguard is the equivalent of an unlawful no-hire agreement.