Non-Compete and Trade Secret Lawyer for Employees

Received a cease-and-desist letter after changing jobs? Most non-competes are void in California, but trade secret claims can be serious. Get advice before you respond or delete anything.

On this page: Non-competes · Non-solicitation · Trade secrets · Responding to a letter · Before you leave · FAQ

Leaving a job for a competitor, or starting your own business, sometimes brings a threatening letter from your former employer: claims that you violated a non-compete, solicited customers, or took trade secrets. In California, many of these threats are weaker than they look, but some are serious, and how you respond in the first days matters. Smith Trial Group represents employees, salespeople, engineers, financial advisors and executives facing non-compete, non-solicitation and trade secret claims throughout Southern California. Attorney Cardon Smith spent years handling business litigation for Fortune 500 companies and understands both sides of these disputes.

Non-Competes Are Generally Void in California

• Business and Professions Code 16600 makes contracts that restrain anyone from engaging in a lawful profession, trade or business void, with narrow exceptions. The California Supreme Court confirmed in Edwards v. Arthur Andersen (2008) that this rule applies even to narrowly drawn employee restrictions.
• Business and Professions Code 16600.5 makes these restrictions unenforceable against California employees regardless of where or when the contract was signed, prohibits employers from trying to enforce them, and gives employees the right to sue and recover attorney’s fees.
• Labor Code 925 generally prevents employers from requiring employees who primarily live and work in California to agree to litigate outside California or under another state’s law, unless the employee was individually represented by a lawyer in negotiating the agreement.

Exceptions apply mainly to the sale of a business or a substantial ownership interest, and the dissolution of a partnership or LLC. See executive employment.

Customer and Employee Non-Solicitation Clauses

California courts have generally treated broad customer non-solicitation clauses as void under Section 16600. Employers may still pursue claims if an employee uses the former employer’s trade secrets, such as confidential customer lists, to solicit customers. Employee non-solicitation clauses have also been found unenforceable by many California courts. The details of what you take and how you contact clients matter.

Trade Secret Claims Are the Real Risk

Because non-competes are mostly unenforceable, California employers often frame their claims as trade secret misappropriation under the California Uniform Trade Secrets Act or the federal Defend Trade Secrets Act. These claims can lead to injunctions, damages and, in some cases, attorney’s fee awards. Common flashpoints include:

• Downloading files, emailing documents to personal accounts or syncing to personal cloud storage before leaving.
• Taking customer lists, pricing information, source code or business plans.
• Keeping company devices or failing to return information.

How to Respond to a Cease-and-Desist Letter

1. Do not ignore it, and do not respond on your own without advice.
2. Do not delete anything. Deleting files after a dispute begins can be treated as destruction of evidence.
3. Stop using any former employer information and let your lawyer handle the return or certified deletion of anything you still have.
4. Tell your new employer through counsel. Many new employers have dealt with these letters before and may provide support.
5. Consider going on offense. Where a former employer tries to enforce a void non-compete, California law can allow you to sue and recover attorney’s fees.

Before You Leave

If you are planning to resign, get advice first. A short consultation about your agreements, what you can and cannot take, and how to announce your move can prevent a lawsuit. Financial advisors should also review the rules for their industry. See financial advisors and FINRA employees and tech employees and equity.

Frequently Asked Questions

Is my non-compete enforceable in California?

Usually not. Business and Professions Code 16600 voids most employee non-competes, and California law makes them unenforceable against California employees even if they were signed in another state. Narrow exceptions apply, such as the sale of a business.

Can my old employer stop me from contacting customers?

Broad customer non-solicitation clauses are generally void in California, but you can still face claims if you use the former employer’s trade secrets, such as confidential customer lists, to solicit customers.

What should I do if I received a cease-and-desist letter?

Do not ignore it, do not delete anything, stop using any former employer information, and get legal advice before responding.

Can I sue my former employer for trying to enforce a non-compete?

Yes, in some cases. California law gives employees a right to sue employers that try to enforce void non-competes, and allows recovery of attorney’s fees.

What counts as a trade secret?

Information that derives value from not being generally known and that the employer takes reasonable steps to keep secret, such as confidential customer data, pricing, formulas, source code and business plans.

How do you charge for these matters?

We discuss fees in the free consultation. Options depend on whether the matter is defensive, such as responding to a letter, or offensive, such as suing to void a non-compete.