Labor Employment Law Blog

In Edwards v. Arthur Andersen LLP, the California Supreme Court reaffirmed California's strong public policy against covenants not to compete.  The primary issue in the case was whether the Ninth Circuit's "narrow restraint" exception was a proper interpretation of California law.  Under the narrow restraint exception, employers could enforce non-competition agreements that did not "entirely preclude" an employee from practicing his or her trade.  The Supreme Court summarily rejected this exception.  The lesson for employers is that unless a covenant not to compete falls squarely within one of the statutory exceptions, it is not likely to be upheld by a California court.

Every day employers terminate employees and pay significant sums to departing workers in exchange for a release of claims.  Such agreements can give employers a measure of comfort and certainty while at the same time offering departing employees value and simplicity.  However, when a departing employee is 40 years of age or older, and release language is intended to include potential claims under the Age Discrimination in Employment Act of 1967 (the “ADEA”), the agreement must meet all of the requirements of the Older Workers Benefit Protection Act (the “OWBPA”).  Wells v. Xpedx, a United States District Court case from the Middle District of Florida, illustrates the potential pitfalls of failing to do so carefully.