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ARTICLE · 03 MARCH 2014

Forum Selection Clauses And Non-Compete Agreements

Drinker Biddle & Reath LLP
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You are a California employer with out-of-state headquarters, and your executive works and lives in California. Your employment agreement has a one-year post-termination non-compete. Can you enforce it?

United StatesEmployment and HR
Kate Gold
Kate Gold

The Issue: You are a California employer with out-of-state headquarters, and your executive works and lives in California.  Your employment agreement has a one-year post-termination non-compete. Can you enforce it?

The Solution: In general, no, but the answer may depend on whether you have a valid forum selection and choice of law clause that provides for resolution in a state that permits reasonable post-termination non-competes.

Analysis:  In general, California employers cannot enforce post-termination non-competes and a party cannot circumvent California restrictions on non-competition with a choice of law provision designating a more non-compete friendly jurisdiction.  However, the Supreme Court's recent decision in Atlantic Marine Construction Co., Inc. v. U.S. District Court for the Western District of Texas, 134 S. Ct. 568, 571 U.S. ___ (Dec. 3, 2013) held that contractual forum selection clauses should be enforced in all but the most exceptional cases,

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