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CA High Court Brightens Rule Against Non-Compete Pacts

By Cheryl Miller

In a ruling long awaited by the employment law sector, the California Supreme Court effectively rejected the use of most non-competition agreements in California. In Edwards v. Arthur Andersen, S147190 (Aug. 7, 2008), the unanimous court held that a state statute with roots in 19th-century laws gives California workers great freedom to switch jobs, to compete against old employers and to solicit former clients.

With its decision in Edwards, the court rejected recent Ninth Circuit findings that California's Business and Professions Code ' 16600 contained a “narrow restraint” exception that allowed companies to use non-compete agreements so long as the pacts only restricted “a small or limited part” of their employees' future ability to work.

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