In accordance with the prohibition on non-competition prohibitions, as set out in Section 16600, California law makes it clear that an agreement between an employer and an employee prohibiting the customer application is not applicable (unless it is directly related to the use of trade secrets) because it is considered a restriction of competition. However, an agreement prohibiting the request of other staff may be applicable as long as it includes reasonable time and geographic restrictions. The case concerned Robert Moyes, who, prior to resigning as Managing Director of Loral Corp., was a member of the Board of Directors. As part of its termination, Moyes agreed to preserve Loral`s trade secrets and confidential information and “not to disturb or attack its employees, disrupt its relationships with customers, agents, representatives or sellers or in any other way.” In the past, some California courts have recognized other non-legal exceptions to this policy, particularly non-advertising employees and non-interference provisions in employment contracts. However, in recent cases, the courts appear to be determined to fill this judicial gap and to prohibit these provisions as unacceptable trade restrictions. Nevertheless, many companies feel that comprehensive provisions discourage both ex-employees and competitors when they raid employees. Even if the provision is eventually repealed, both the former employee and the competitor must be taken into account in their planning of probable litigation or arbitration, the costs of trial and the eventual loss of the case. Such a cost-benefit analysis can lead a company to give up the effort. Potential effects if the agreement is respected or cancelled. Loral Corp. Moyes (1985): The Court of Appeal held that a non-invitation agreement was valid. It can also be seen that the worker`s non-invitation clauses are contrary to Section 16600 when they are too broad, which in fact becomes a crippling restriction on the worker`s ability to work in his or her profession or profession.
The Loral Corp. Moyes (1985) court held that the disputed agreement was rather a “non-interference agreement” between the employer and the former employee. It confirmed the non-interference agreement that prevented the former employee from recruiting workers from the employer and, although the agreement had no time limit, the court interpreted the one-year application agreement. However, two recent cases in California have cast doubt on Loral`s viability and found these provisions unenforceable. The Court of Appeal set aside that decision and found that the provision was not applicable under California law. It found that the supply was broad and covered all VLS employees, whether they worked with Star Trac or even were employed at that time. “Such a broad provision is not necessary to protect THE interests of VLS and is offset by the policy to promote workers` freedom of mobility,” the court wrote.