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Second Court Calls into Question Viability of Employee Non-Solicitation Agreements

As we’ve discussed, the California Court of Appeal in AMN Healthcare, Inc. v. Aya Healthcare Services, Inc., recently ruled that a broadly worded contractual clause that prohibited solicitation of employees for one year after employment was an illegal restraint on trade under California law.

Now, a second court has joined in.

 In Barker v. Insight Global LLC, Case No. 16-cv-07186 (N.D. Cal., Jan. 11, 2019), Judge Freeman, sitting in the Northern District of California, adopted AMN’sreasoning and reversed a prior order that dismissed claims that asserted a contractual employee non-solicitation provision was unlawful.

In doing so, the Court adopted the primary holding of AMN – that contractual prohibitions barring solicitation of employees are invalid under the California Supreme Court’s reasoning in Edwards v. Arthur Andersen LLP (2008) 44 Cal. 4th 937. The Court also rejected the secondary ruling in AMN, which would have arguably limited the holding of AMN to its facts.

Barker is the second court in as many months to invalidate an employee non-solicitation provision and employers who regularly include such provisions in their agreements with California employees should reassess their use and enforcement of those provisions.

©2021 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume IX, Number 35
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About this Author

James A. Goodman, Labor, employment, attorney, Epstein Becker Law firm
Member

James A. Goodman is a Member of the Firm in the Labor and Employment and Litigation practices, in the firm's Los Angeles office. Mr. Goodman's practice focuses on employment and business litigation.

Mr. Goodman's experience includes:

  • Representing employers in both state and federal courts in all aspects of labor and employment law litigation, including wage and hour, wrongful termination, sexual harassment, and discrimination

  • Successfully prosecuting and defending numerous...

310-557-9519
David Prager, employment lawyer, Epstein Becker
Associate

DAVID M. PRAGER is an Associate in the Employment, Labor & Workforce Management practice, in the Los Angeles office of Epstein Becker Green.

Mr. Prager:

  • Advises on and litigates unfair competition, non-compete, and trade secret matters, including disputes involving the misappropriation of trade secrets by former employees
  • Defends management in discrimination, harassment, retaliation, wrongful termination, and wage and hour matters, including individual and class action lawsuits, in state and federal courts and before arbitration tribunals...
310-557-9523
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