California companies’ authority to prevent employees from being recruited away by means of non-solicitation agreements appears to be crumbling. 

While we await the California Supreme Court to weigh in with an explicit ruling, several recent cases — particularly a decision in April — signal a shift in favor of employees. If you’re grappling with a former employer, we can help you understand your legal options as the law evolves.

Non-solicitation provisions, which are fairly common in employment agreements, mean that employees who leave a company can’t recruit their former co-workers to join them at their new jobs for a certain period of time. But such agreements aren’t clear-cut in California.

State law says that any contract that keeps someone from lawful work is void. But for nearly 35 years, employers have benefitted from an appellate court decision (Loral v. Moyes) that allowed so-called reasonable non-solicitation provisions, saying that limited agreements only slightly restrict employees and stabilize the work force.

However, late last year, a California Court of Appeal held (AMN Healthcare Inc. v. Aya Healthcare Services Inc.) that a company could not keep former employees — whose job was to recruit travel nurses — from reaching out to former co-workers. That, the court said, improperly hindered their work in their profession.

Shortly after, in January, a U.S. District Court judge in San Jose relied on the AMN opinion to invalidate a non-solicitation agreement that also involved the recruiting profession (Barker v. Insight Global LLC). However, the cases’ similarity created some question about whether the precedent applied only narrowly to the recruiting profession.

Then, another U.S. District Court judge in San Jose handed down the decision (WeRide Corp. v. Kun Huang) that could signal an imminent stoppage for non-solicitation provisions in California. The parties involved are competing to bring autonomous vehicles to the Chinese market; they butted heads regarding trade secret theft and a list of other grievances. 

Although the court agreed with many of WeRide’s claims against its former executive, the court said there could be no breach of contract claim for soliciting a former co-worker to join a new company because “the clause is void under California law.”

To date, the California Supreme Court has said non-compete agreements are void under state law, but the court has not specifically addressed non-solicitation agreements (Raymond Edwards II v. Arthur Andersen LLP in 2008).

The law in this area continues to evolve, but it leaves hope for workers who want to tell former co-workers about new opportunities or who are being hassled by former employers. If you need help understanding your legal options and protections in this area, contact Keller Grover for a free consultation. In more than 25 years litigating fraud and employment cases, the lawyers at Keller Grover have recovered hundreds of millions for clients and class members.