Nonsolicitation Agreement Enforceable Following Transfer of Business Assets

March 24, 2022 | From HRCalifornia Extra

by Michelle Galbraith, J.D.; HR Adviser, CalChamber

In order to foster open competition and employee mobility, California Business and Professions Code section 16600 invalidates agreements, such as noncompetition and nonsolicitation clauses, that would restrict individuals’ ability to practice their trades or businesses. 

However, an exception to this law exists when an individual sells all of their ownership in a business; in this situation, the buyer may enforce an agreement that a seller won't open a competing business or solicit former customers.

  • ​​


    This premium content is for our members. For immediate access, join online or by phone at 800-331-8877. Or Start a Free Trial Now for 7 days.

    Already a Member? Sign In Below.

Sign In
Remember Email