Labor Employment Law Blog

It is well established that covenants not to compete are generally unenforceable in California. The Fourth District Court of Appeal's opinion issued on Monday in Strategix, Ltd. v. Infocrossing West, Inc., however, involves one of the few exceptions making non-competes enforceable (wherein the provision is entered into as part of the sale of a business), and even restricts that.  In Strategix, Ltd. v. Infocrossing West, Inc., the Fourth District, without explanation or other discussion, lumped together the issue of the enforceability of covenants not to solicit employees with covenants not to solicit customers.  Strategix, Ltd. v. Infocrossing West, Inc., No. G036177 (Cal. App. 4 Dist./Div. 3) (9/11/06). This opinion is misleading and will likely cause confusion in the future as to the correct standard for each, as there has always been much more leeway for non-solicitation of employees provisions than there has been for non-solicitation of customers provisions.

Labor and employment laws affect the entire legal relationship between employers and employees, beginning with the initial hiring process and expanding into every facet of daily operations, including job descriptions, wages, promotions, reviews, terminations, benefits, mergers and acquisitions, as well as the successful resolution of disputes pertaining to unfair labor practices and discrimination. Because the laws that apply to the labor and employment relationship are found at all levels of government—federal, state, county and even city—making sense of these oftentimes conflicting requirements is more of a challenge than ever for today's employers.

On many occasions, employers seek to "do the right thing" and yet don't realize they might be in violation of the law. Knowing what to do and when is a core competency of Sheppard, Mullin, Richter & Hampton LLP's Labor and Employment attorneys. With one of the largest and most prestigious Labor and Employment practices in the country, Sheppard Mullin advises employers of all sizes—ranging from Fortune 100 companies to high tech and traditional business start-ups—in all aspects of employment counseling and litigation. The strength and depth of our practice is rooted in our ability to provide truly full service labor and employment law counseling.

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