Unlocking the Power of Digital Signature Legality for Non-Solicitation Agreements in Canada

How to eSign a document: digital signature legality for Non-Solicitation Agreement in Canada

hey this is logic watts Weinstein and you are watching legal your trip today I want to talk about non-compete agreements or not a competition agreement so if you're not familiar with them this is a contract or a clause in a contract sometimes goes inside of an NDA non-disclosure agreement stating that someone will typically not compete with you open up their own business or work for a competitor usually within a certain range now in this state within a hundred miles in this city for one year two years some period of time and usually in the same industry sometimes you might list competitors they can't work for just someone who does the same kind of business no one's you can imagine you make sense in some cases to have your contractors or employees or business partners sign something like this so they don't just take all of the knowledge they got from you in their contacts the customer is the client list and go start up a competitive business to you or just go work for your arch competitor across the street but there's a whole bunch of problems with them some of which I'm not gonna go into right now one of them is that here in California as a lot of people know non-compete agreements are illegal just not really the right term but that's what we like to say so it makes sense everyone the issue is that actually is an oversimplification of how it works it's not just that if you're here in California non-competes are illegal it's not that non-competes are illegal and it's that's not the only thing that's not legal so here's what the actual rule says there's a statute in California that says and I'm reading it except as otherwise provided in this chapter so there's some exceptions very tiny ones every contract by which anyone is restricted from engaging in a lawful profession trade or business of any kind is to that extent void so this doesn't just apply to apply to employees this is anyone you can't have a contract in California that restrains not just not restricts it doesn't mean they can't have a business it evened restrains them even somewhat from engaging in a profession trade or business it's this is a incredibly broad statute and California public policy in other words kind of all the the purpose behind the statute is huge and very wide reaching it is very difficult to create an exception to this so what does that mean not only is it that you can't if you haven't if you're here in California and you're hiring an employee in California you can't have them agree to a non-compete if you're a business somewhere else and you hire contractors who sometimes go to California or fair amount of the timer in California or live in California even if you put in the agreement New York law applies or Washington state law applies and they're here in California you may not be able to enforce it because California courts probably won't care what your choice of law clause says in your contract if you draft a contract and say you're here in California and you have an employee here in California you draft a contract that says it's not non-compete doesn't say not the because you're not you complete it yet right it says at the non-solicitation clause and it says look yeah I get that you can go work forever better but you can't solicit any of our employees and you can't solicit any of our clients to come with you probably ain't gonna fly either and this is what I'm saying this is a very broad very broad statute and the big the big issue is is it because it doesn't just apply to companies in California it applies people who are doing business with with someone in California independent contractors vendors joint venture agreements you may have someone who's a virtual employee who ends up moving to California you may accidentally have these rules apply to you this is a case where if you want to if you want to have a non-compete clause and no non-solicitation clause anywhere in the United States actually whether or not it's in California I do recommend this as a time where hiring a lawyer is going to be helpful and worth the money because even in other states there's going to be other restrictions in some states you can only have it be for one year versus two years in some states there needs to be money attached to it so you can't just hand the hand that's non-compete to your current employees you need there needs to be some a consideration it needs to be a condition not just of their future employment but of them getting a raise or them getting a bonus or their they can sign it when they originally come in but not later there's an art to it and if you want it this should be broad for example if you do business online and you want the non-compete to apply everywhere that you could possibly have it apply then you're gonna need some help there's a lot of form agreements on the internet even ones that purport to be valid in California that are not going to work because this is one of those area law of areas of law that changes on a daily basis I regularly see cases come down that I'm like yeah I got a redo all my non-compete agreements like because it changed things we had found a little loophole and some little creative way to do non-solicitation clauses that they just closed so my lesson to you is this is one of the things that you need to learn about if you want to do now computer and or hire a lawyer because this is one place where it's actually worth their money hey this day is also spots Weinstein and you just watched legal your truth for more tips for small business owners and entrepreneurs you can go to elizabeth pw calm or follow me on twitter at elizabeth pw thanks