So what exactly happens if you violate a non-compete agreement? The simple answer is that if you violate a legally valid and enforceable non-compete agreement under state law, you will end up having to pay money to your former employer. In addition, your former employer may also take legal action against your current employer because you are violating the non-compete agreement. But it may also happen to you after a violation of a non-compete agreement, because the employer does not want to enforce the agreement and take legal action against you or your future employer. What is more, it is also possible that you will not have any consequences on the violation of a non-competition clause because, at first, the agreement is not even binding. All this can be alarming for someone who has no legal training and it is important to contact an experienced lawyer before entering into a non-compete agreement or as soon as you think you may be subject to an agreement. Although there is no absolute path, a better choice would be a “code of conduct” for the employer. While a non-compete agreement is intended to deter a former employee from cooperating with a direct competitor, a statement of conduct contained in a personnel manual may establish the company`s policies, including a prohibition on asking the company`s customers and using one of the company`s business secrets or other proprietary information (including customer lists) for a specified period after departure. However, in cases where the non-compete clause has been properly developed and implemented, a court may award you damages for your employer`s potential losses or, in rare cases, a court will order that you be prevented from working for the competitor for the duration of the clause. We will now talk about the most pessimistic scenario: what happens if the former employer wins the complaint for violation of the non-competition agreement? Work-related agreements (including termination and severance agreements) that contain a non-compete clause or limit an employee`s ability to request or accept business should be reviewed and reviewed by a California labour specialist. Employers should also consider reviewing and replacing all agreements previously implemented by their workers that contain non-competition clauses that have been designed to “closely” use the now invalid exception. Third alternative: liquidated damage.
Liquidated damages are provided in a contract as an amount or formula for calculating an amount that a party will pay for the breach of contract. In this context, employers may include an amount that the worker must pay if he violates the non-compete agreement with his employer. Since the liquidated damages are part of the contract, the new employer is not required to pay the liquidation damages unless he has signed a contract directly with the former employer. The courts must decide whether a liquidation clause is appropriate before being required by a party for payment. This amount may also vary. As a general rule, a non-competition agreement is outdated and, in turn, unenforceable. Nevertheless, California employers still require their employees to sign a non-compete agreement before starting work, occasionally in the event of termination and sometimes in a workplace, after the worker has been working for some time. Unfortunately, California employers only wake up slowly and recognize the heavy penalties they face when they ask employees to sign an illegal provision.
The most frequently sought (and most frequently granted) type of exemption for violation of a non-compete agreement is an injunction. This means that, in many cases, the former employer cannot or cannot seek damages.