Updated October 16, 2023
A California non-solicitation agreement is a contract between an employer and an employee that prohibits the employee from using the employer’s customers, clients, employees, and contractors for their own benefit after leaving the company. It can also be used between the buyer and seller of a business to prevent the latter party from interfering as competition.
Is It Legally Enforceable in California?
It is undetermined whether non-solicitation agreements may be legally binding in California. Non-compete agreements, which are broader and prevent a former employee from working in the same field as the former employer, are almost entirely prohibited by statute in California. (Cal. Bus. & Prof. Code § 16600)
For years, however, courts in California had distinguished non-solicitation agreements from non-compete agreements and had generally allowed the former. (Loral Corp. v. Moyes, 174 Cal. App.3d 268, 279 (Cal. Ct. App. 1985))
However, a more recent Court of Appeal decision struck down a non-solicitation agreement, citing a 2008 California Supreme court case (Edwards v. Arthur Andersen LLP), and doubted that Loral was still valid law. (AMN Healthcare, Inc. v. AYA Healthcare Servs., Inc. 28 Cal. App. 5th 923, 939 (Cal. Ct. App. 2018))
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What Can a Non-Solicitation Agreement Prohibit?
In general, a non-solicitation agreement can be used to restrict a former employee from recruiting, contacting, or hiring the employer’s:
- Former or current clients and customers
- Former or current employees
- Independent contractors
- Business associates
What Should a Non-Solicitation Agreement Include?
In order to stand up in a court of law, it is recommended that a non-solicit covenant include limitations on the following parameters:
1. Time Limit
A non-solicitation agreement should contain a reasonable time restraint that can be proven necessary to protect an employer’s business interests while balancing the rights of the employee.
2. Geographical Restraint
This limits the terms of the non-solicitation agreement to apply to only a specific area or location.
3. Specific Action
The agreement must specify exactly what the individual is restricted from doing, such as soliciting specific clients or employees.
Related Forms
California Non-Compete Agreement
Download: PDF, MS Word, OpenDocument
California Non-Disclosure Agreement
Download: PDF, MS Word, OpenDocument