Legalized leisure hashish companies are nonetheless new in California. As a hashish enterprise proprietor, chances are you’ll be pondering that an effective way to guard your confidential data and stop your workers from leaving can be a non-compete settlement. Suppose once more. Not solely are non-competition agreements unenforceable and prohibited in California, however they’ll include legal sanctions if an employer requires an worker to enter right into a non-competition settlement as a situation of employment. In different phrases, don’t even take into consideration getting into into non-competition agreements with you California hashish workers.
Many hashish corporations might attempt one other route to guard their confidential enterprise data and get workers to stay round by means of “non-solicitation agreements.” Non-solicitation agreements will not be as restrictive as non-competition agreements and usually will not be prohibited by California regulation. Non-solicitation agreements sometimes prohibit workers from taking any actions that may trigger any worker, buyer, or vendor of the employer to vary its relationship with the employer. California courts will rigorously scrutinize non-solicitation agreements to make sure they don’t seem to be overly broad and subsequently crossing the road from non-solicitation into non-competition. A current case from the California Court docket of Appeals demonstrates that the courts are persevering with this custom and punctiliously inspecting non-solicitation agreements and solely implementing them if they’re true non-solicitation agreements.
In AMN Healthcare Inc v. Aya Healthcare Providers Inc, AMN Healthcare required workers to signal a non-solicitation settlement stopping them from soliciting different workers of AMN Healthcare, to depart the service of AMN Healthcare. AMN Healthcare required a recruiter it employed to signal the non-solicitation settlement. The recruiter then went to work for Aya Healthcare, which practiced in the identical area as AMN Healthcare. The recruiter, pursuant to the non-solicitation settlement was not allowed to recruit workers from AMN Healthcare. Litigation ensued.
The Court docket of Appeals decided the broad language of AMN Healthcare’s non-solicitation settlement violated California’s Enterprise and Professions code as a result of it restricted the worker’s capacity to freely have interaction in a lawful occupation or commerce. Particularly, the recruiter couldn’t freely recruit from AMN Healthcare, her precise skilled necessities. Whereas the Court docket of Appeals choice turned on the recruiter’s particular concern, the Court docket went additional and famous AMN Healthcare primarily employed journey nurses for a interval of 13 weeks or much less. The AMN Healthcare non-solicitation settlement was to be in impact for a minimum of one yr following the top of the employment relationship. The Court docket discovered this to be overly restrictive provided that many of the nurses had been employed for such a brief interval. Total, the courtroom decided the non-solicitation agreements ANM Healthcare required workers to signal had been unenforceable.
What does this imply to your hashish firm? Non-solicitation agreements may be helpful instruments to assist defend confidential data and defend workers from leaping ship. Nonetheless, they should be rigorously crafted to be enforceable. There’s little level in requiring workers to signal an unenforceable non-solicitation settlement. Extra importantly, non-solicitation agreements should be rigorously drafted to make sure they don’t seem to be really non-competition agreements that might violate the Enterprise and Professions Code, and topic your hashish firm to legal sanctions. In case you are eager about a non-solicitation settlement, it’s at all times finest to seek the advice of a hashish employment lawyer to draft a robust one that may defend your pursuits.