Non-Competition and Non-Solicitation In California: Court of Appeal Upholds Public Policy Supporting Right to Pursue Profession

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California Strongly Supports Individuals’ Rights To Pursue Their Profession

In AMN Healthcare, Inc. v. Aya Healthcare Services, Inc., employer AMN sued former employees (nurse recruiters) whom had quit to work for Aya Healthcare. The Fourth Appellate District agreed with the trial court’s determination, siding with the nurse recruiters, that California Business and Professions Code Section 16600 voids agreements that would limit the right to pursue a profession.

Here, the rub was in the specific facts. The employees that had left had a particular kind of job. The employee defendants were nurse headhunters who recruited nurses to work for these nurse “temp agencies”. When a few of them jumped ship to go recruit for another temp agency, AMN tried to enforce its agreement. AMN claimed the nurses stole AMN intellectual property, including identities and contacts of nurses. AMN claimed the identities and contacts were AMN secrets.

The trial court (Hon. Joel Pressman) and the Fourth District Court of Appeal both rejected former employer AMN’s claims that the nurse recruiters stole proprietary information. This was at least partly based on the finding that the nurse identities and nurse contacts were available publicly. If it’s public, then the cat’s out of the bag and it’s not protectable as a secret.

Further, the Fourth District held that the AMN agreement violated the public policy stated in Section 16600. The Fourth District found the nurse recruiters had a right to pursue their profession: to recruit nurses. If you are in California and have a lawful profession or business, then Section 16600 protects you.

In this case, the nurses and Aya were represented by the estimable Bill Whelan of Solomon Ward, along with Mei-Yin M. Imanaka and Deborah A. Yates. Aya and the nurses succeeded in obtaining both an injunction to prevent AMN from enforcing its nonsolicitation provision and also recovered their attorneys’ fees and costs.

Takeaways for Employees

Employers commonly hand new hires a slew of forms to sign on their first day. These can include W4s, Emergency Contacts, Mobile Device Agreements, Notice of Investigative Consumer Report, Employee Handbook, etc.

Often, there is a desire to “start off on the right foot”. New employees fear appearing slow or incompetent in deciphering “legalese”. Consequently, new hires just sign these multiple forms and hand them back.

Frequently we speak with these employees some months or years later and ask what they signed with the employer. We often hear that employee received no paper copy of what they signed. Electronic access usually ends on the same day employment ends.

One of the provisions frequently contained in California Employee Handbooks is a “Non-Compete/Non-Solicitation” Clause. As discussed above, former employers sometimes use these contracts to threaten former employees.

We have represented employees dealing with threats of former employers against them. If you have an issue like this, please feel free to contact this office to discuss your matter confidentially with us.

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