We recently shared a California federal court decision in Barker v. Insight Global, LLC, et al. that relied on Section 16600 of California’s Business and Professional Code to hold that, in California, non-solicitation provisions in employee agreements are presumptively invalid. The California statute governing restrictive covenants provides that “[e]xcept as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void,” Cal. Bus. & Prof. Code §16600. But it does not expressly provide conditions under which a restrictive covenant would be enforceable against an employee. This has left the statute vulnerable to the kind of judicial interpretation seen in Barker, in which the “reasonableness” standard, applied to non-solicitation provisions for decades, was rejected in lieu of an invalidity presumption.

The good news for employers, however, is that many states outside California within the Ninth Circuit have express statutory provisions permitting restrictive covenants under certain conditions as outlined in the survey below:

Where state statutes are silent on restrictive covenants or do not provide express carve-outs for enforcement, employers and employees have less certainty and remain more vulnerable to shifting judicial interpretations of these provisions.