California courts protect moonlighting employees for almost all CA companies, regardless of whether the employee is out of state. If your employer is a multi-state one, however, you'll need to take some things into account:
Out-of-State Agreements and Multi-State Employer Strategies
Who wins often depends upon a race to the courthouse. For multi-state
employers it is often a rush to the courthouse to determine if a
non-compete agreement is valid. The employer's strategy is to get an
order outside of California in their favor. The employee or California
prospective employer's strategy is to get an order within California
in their favor. In the face of dueling, and opposing orders, the first
to the courthouse may win because states often must give effect to
orders from other courts.
Microsoft v. Google. In 2005 a federal court agreed to stop a lawsuit
in California to invalidate a noncompete agreement, so that litigation
could proceed in Washington to enforce the noncompete. The ruling
essentially lost the case for Google. A copy of the ruling and more
analysis is in the Members Area. The bottom line, though, is that it
may be important than ever to win the race to the courthouse.
The seminal case discussing the conflict between California law and
multi-state employers is Application Group, Inc. v. Hunter Group, Inc.
(1998) 61 Cal.App.4th 881. In Hunter, a Maryland company with branch
offices in California and other states required its non-California
employees to sign a 1-year non-compete agreement. The agreement also
stated that it was governed by and to be construed by Maryland law. In
Maryland, non-compete agreements are valid. A Maryland employee [who
had never set foot in California] then left and sought to go work for
a competitor in California. When the prospective California employer
sued to invalidate the agreement, the court agreed and ruled that the
non-compete provision was invalid. Section 16600 reflects a "strong
public policy of the State of California" and California has a strong
interest in applying its law and protecting its businesses. (Id., at
900.) California law may thus be applied to non-California employees seeking employment in California. (Id., at 908.)
As a result of this case, the following individuals have the following
strategies to pursue:
California employees with a non-compete agreement signed in California
- no problem, the agreement is invalid unless an exception applies. Non-California individuals with an out-of-state non-compete seeking
employment in California - file suit in California to invalidate the
agreement. California employers seeking to hire an employee with an
out-of-state non-compete agreement - file suit in California to
invalidate the agreement. Out-of-state or multi-state employers with
an out-of-state non-compete agreement - file suit anywhere but
California to validate the agreement.
Disclaimer: This is an opinion and not legal advice nor does it constitute an attorney-client relationship.