California labor laws protect the principle of employee mobility, which helps employees leave their job to work for a competitor. As such, employees might have a claim for wrongful termination if their new employer decides to honor a non-compete clause the employee signed with their previous employer.
Non-compete clauses are void
Under the California Business and Professions Code, a contract that restricts competition by preventing an employee from working for a competitor, known as a non-compete clause, is considered void and unenforceable. Furthermore, California courts have ruled that employers that attempt to restrict competition through non-compete clauses may have breached unfair competition laws.
The perspective of the new employer
If you signed a non-compete clause with your previous employer but have now moved to work for a competitor, your new employer should have no concerns about the non-compete clause, as it is unenforceable. In Silguero v Creteguard, an employer faced with this situation fired their new employee after the former employer contacted the employer to notify them of the non-compete clause. Although aware that the clause was void and unenforceable, the employer decided to honor the non-compete clause out of respect for a colleague in the industry. The employee filed a wrongful termination suit. The California Court of Appeals ruled that by firing the new employee, the employer had effectively entered into an illegal no-hire agreement with the former employer, and the new employee had been wrongfully terminated.
Your right to compete
California laws protect your right to join a competitor or to form your own competing business. Employers may try to get around the problem of non-compete clauses by having you sign a non-solicitation agreement. This would prevent you from soliciting customers from your old employer for your new job or business. However, these too may be void and unenforceable in certain situations. In all cases, it is best to check with an experienced labor law attorney.