Edwards v. Arthur Andersen

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Sep 3

Edwards v. Arthur Andersen

Linda Chan

September 3, 2006

Know More: Employment law 2.0, Employment law

In Edwards v. Arthur Andersen, a California appellate court expressly rejected a “narrow restraint” exception to California’s non-compete statute. The narrow restraint exception is relied on by federal courts to enforce non-competes against California employees where the restraint excludes an employee from a narrow portion of her/his profession.

The court concluded that federal courts misapplied state law in articulating and applying the narrow restraint exception. The court held that non-competes were invalid even if the restraints imposed are narrow and leave a substantial portion of the market open to the employee.

California’s Business & Professions Code Section 16600 et seq. prohibits post-employment non-competes. One exception is when the non-compete imposes only a “narrow restraint” on an employee (for example, an exclusion from one small part of the market). The court relied on state court decisions holding that §16000 made no exception for contracts only in partial restraint of trade.

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Stock and Compensation Dec 21, 2007
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Noncompetes Dec 19, 2007

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