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.