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Jul13
No-Hire Provisions

The following is not meant to be legal advice.

 

The California Court of Appeals in VL Systems, Inc. v. Unisen, Inc. on June 25, 2007 stated that there should be no more broad no-hire provisions between business parties that restricts employment opportunities for their respective employees.

David Rohnow was a senior engineer at VL Systems.  He was hired by Star Trac Strength as a director of information technology. Star Trac Strength was aware of the no-hire provision that it had with VL Systems but decided it was inapplicable because (1) Rohnow had not performed work under the consulting contract for VL Systems which had the no-hire provision; and (2) Star Trac Strength did not go after or solicit Rohnow. After Rohnow was hired, VL Systems sent Star Trac a bill for $60,000 pursuant to the no-hire provision in the contract.

 

 

California Business & Professions Code Section 16600 prohibits contracts that restrain an employee from engaging in a lawful profession, trade or business of any kind.

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