---
title: How Can California Businesses Protect Company Information When Employees Leave
description: How does a California employer prevent its business from walking out the door along with a departing employee? Read here.
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## [How Can California Businesses Protect Company Information When Employees Leave](https://promotion-payroll-hr.pinnaclehro.com/human-resources-articles/bid/83423/How-Can-California-Businesses-Protect-Company-Information-When-Employees-Leave)

[Posted on Wed, Apr 03, 2013](https://promotion-payroll-hr.pinnaclehro.com/human-resources-articles/author/michael-allen)

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![non-compete agreements](https://promotion-payroll-hr.pinnaclehro.com/hs-fs/file-26633930-jpg/images/shutterstock_125888738-300x252-resized-600.jpg)How does a California employer prevent its business from walking out the door along with a departing employee?  In most jurisdictions, the employer could have the employees sign a non-compete agreement.  Not in California. 

One of the notorious employment laws that separates California from other states is its [long-standing prohibition of employee non-compete agreements.](http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=16001-17000&file=16600-16607) California’s strong public policy against non-competes not only affects local employers, but it often complicates efforts of multi-state employers to utilize uniform restrictive covenants–such as non-competes and non-solicitation provisions–with its employees.  Here is a brief recap:

**Non-Competition Agreements:**

**Most States**:  Most states enforce agreements where employees agree not to compete with their former employer for a reasonable period after employment, within a reasonable geographical area.

**California**:  In California, even narrowly drawn restraints are contractually invalid, unless they fall within the specific statutory exceptions, such as agreements in connection with the sale of a business.

**Customer non-solicitation provisions:**

**California**:  California significantly limits the use of customer non-solicitation provisions and will likely prevent enforcement of a contract clause purporting to ban a former employee from soliciting former customers to transfer their business away from the former employer to the employee’s new business. 

**Employee non-solicitation provisions: **** **

**California**:  The California ban on non-compete agreements can extend to “no hire” agreements between two businesses.  While some California courts still enforce non-solicitation of employees provisions, “no hire” agreements are not enforceable.

**No “blue-penciling”**

**Many States**:  Many states permit the modification or “blue-penciling” of overly broad restrictive covenants to make them enforceable.

**California**:  California courts typically do not allow “blue-penciling” in the employment context.  Instead, they refuse to enforce agreements, even if the parties have agreed to “save” the clause to the extent enforceable.

**Is there a trade secrets exception?**

Some California courts have stated that certain non-competition clauses are enforceable if they are necessary to protect trade secrets, while others have cast doubt on whether a trade secret exception exists.  To date, there has not been a detailed analysis of the nature of the trade secrets exception, if any, and what an employer must show to support its application.  Caution is thus the watchword in relying on a trade secrets exception.  If it turns out there is no genuine trade secret, nonsolicitation clauses are likely to be unenforceable.  Plus, the inclusion of such a provision may open up the employer to liability under California’s unfair business practice statute.

Without the backstop of non-compete agreements, **what is the Californiaemployer to do **to ensure that its trade secret information is adequately protected? 

***Workplace Solutions***

California employers must be vigilant to ensure that their employees don’t share their valuable information with competitors.  

Best practices include:

- Robust confidentiality and invention assignment agreements.
- Effective entrance and exit interview protocols.
- Employee education programs that create a culture of confidentiality whereby employees understand the value of protecting company data.
- Effective trade secret protection measures that take into account new technologies and threats, including cyber threats and social media/cloud computer issues.

By Robert B. Milligan, Jessica Mendelson, and Daniel Joshua Salinas<http://www.seyfarth.com/DanielJoshuaSalinas>

 Tags: [B&P Section 16600](https://promotion-payroll-hr.pinnaclehro.com/human-resources-articles/topic/bp-section-16600), [Best Practices](https://promotion-payroll-hr.pinnaclehro.com/human-resources-articles/topic/best-practices), [Customer Non-Solicitation Agreements](https://promotion-payroll-hr.pinnaclehro.com/human-resources-articles/topic/customer-non-solicitation-agreements), [Data Theft](https://promotion-payroll-hr.pinnaclehro.com/human-resources-articles/topic/data-theft), [Employee Non-Solicitation Agreements](https://promotion-payroll-hr.pinnaclehro.com/human-resources-articles/topic/employee-non-solicitation-agreements), [Employee Raiding](https://promotion-payroll-hr.pinnaclehro.com/human-resources-articles/topic/employee-raiding), [HR Allen Consulting Services](https://promotion-payroll-hr.pinnaclehro.com/human-resources-articles/topic/hr-allen-consulting-services), [HR Informant](https://promotion-payroll-hr.pinnaclehro.com/human-resources-articles/topic/hr-informant)

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