In California, non-compete agreements are illegal [1]. According to at least one source [2], employers requiring non-compete agreements face penalties of $100 per employee, per pay period. Even companies from out-of-state cannot include non-competes in their employment contracts without liability [3]. Moreover, it appears that non-solicitation (aka anti-poaching) agreements are also generally unenforceable in CA [4, 5, 6].

Nevertheless, at every company* company I've worked for in California, a non-compete and non-solicitation agreement comes standard with the employment or consulting contract.

Despite knowing it’s illegal, non-compete and non-solicitation agreements still make me skittish to switch to a competitor. Moreover, these agreements limits the number of opportunities I hear about (I am often contacted by former coworkers precisely at their one-year-out mark). They clearly make it harder to start and grow a company, and generally seem to add drag to the innovation ecosystem that I love.

So my question: Why do I see this all the time? And maybe more to the point, what can we do to make this _not the norm_?

I've seen the discussion on HN help set norms for startups that help innovators and entrepreneurs (e.g., equity comp, series dilution, valuation, vesting, etc.), so I hope this question can raise the profile of this issue in a way that leads to change.

-M

*I've worked for three early-stage startups (including one that was successfully acquired), and a mid-sized, extremely well-regarded kinda-startup, all in SF. This doesn't include my graduate TA-ship and postdoc SoCal. I doubt I signed something like that for those, though I can't remember for sure.

DISCLAIMER: I am not a lawyer, and this is not legal advice. Talk to a lawyer before you break an agreement you signed, or for any other advice on this topic.

Refs:

[1] https://oag.ca.gov/news/press-releases/attorney-general-becerra-calls-nationwide-ban-non-compete-agreements-reminds [2] https://www.contractscounsel.com/b/non-compete-california [3] https://www.dorsey.com/newsresources/publications/2012/07/noncompete-provisions-in-california-unenforceabl__ [4] https://www.youtube.com/watch?v=Lnm26FXcG0M [5] https://law.justia.com/cases/california/court-of-appeal/2018/d071924.html [6] https://tagrelaw.com/non-solicitation-agreements-in-california/