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Litigation, P.C. Law Firm
Los Angeles Litigation Law Firm 424-284-2401

Can Your Former Employer Sue You For Opening Your Own Business After You Quit?


Pessimists call it the Great Resignation, but maybe it is more like the Great Enterprise.  Increasing numbers of employees are resigning from their positions of employment to seek opportunities where they do not have to deal with work supervisors bossing them around and micromanaging them.  Who can blame them when you consider that wages have failed to increase to keep pace with rising prices, and many employees have little or no paid leave, if they even have the classification as employees which would require their employers to pay for health insurance benefits.  If you have signed a non-compete agreement as part of your employment contract, then moving on to a new business project after leaving your employer could be a little more complicated.  A recent executive order aims to prevent misuse of non-compete clauses by employers, so if you signed a non-compete agreement before the summer of 2021, there may be room for debate about whether the agreement is enforceable.  A Los Angeles business litigation lawyer can help you if your former employer is suing you over business activities you engaged in after the end of the employment relationship.

What Is a Non-Compete Clause?

A non-compete agreement can take the form of a free-standing document or a provision of an employment contract.  It states that the employee promises to engage in business activities that compete directly with the employer during the employment relationship or for a set period of time after the employment relationship ends.  If the employee violates the agreement by accepting employment with a direct competitor of the employer or by opening a new business that provides the same products or services as the former employer to the same customer base, the former employer has the right to sue the former employee for damages.

Is Your Non-Compete Agreement Valid?

It is easy to see how non-compete agreements can be unfair; at worst, they are “you’ll never work in this town again” agreements.  It isn’t fair to make an orthodontist promise that, after leaving your clinic, she will never again work as an orthodontist in Los Angeles.  In the summer of 2021, President Biden issued an executive order giving employees subjected to unfair non-compete agreements the right to file complaints against their employers through the Federal Trade Commission.  Non-compete agreements are obviously unfair if they are too general, prohibiting the employee from practicing his or her occupation in any context except for the former employer.  They are most appropriate for high-level employees who have access to a lot of trade secrets.  The California Supreme Court is currently examining a dispute between a solar power company and a former employee who set up his own solar panel business after leaving his employer.

Speak With a Los Angeles Business Litigation Lawyer

A Los Angeles business dispute lawyer can help you resolve disputes with your former employer over non-compete clauses and any other unfinished business.  Contact Litigation, P.C. in Los Angeles, California to discuss your situation or call (424)284-2401.


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