California's Edwards v. Arthur Andersen Decision And the Future for Employee Noncompetition Agreements and other Post-Employment Restraints


In a closely watched decision issued on August 7, 2008, the California Supreme Court in Edwards v. Arthur Andersen unanimously determined that a provision in an employment agreement restricting an employee from serving customers or competing with a former employer was invalid under California Business & Professions Code section 16600, which contains California’s general statutory prohibition for noncompetition agreements. As the Supreme Court held, noncompetition agreements between an employer and employee that even just “partially” or “narrowly” restrict an employee’s ability to practice the employee’s trade or profession are prohibited, contrary to what the Ninth Circuit and other federal courts had previously approved as reflecting California law.

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