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California Court of Appeal Issues Watershed Rulings
- 2. Non- solicitation agreements California employers may find it increasingly difficult to enforce non-solicitation agreements —terms of employment which prevent ex- employees who take up jobs with competing businesses from recruiting their former company's workers—following a Nov. 1 ruling by the California Court of Appeal. Employee Recruiting
- 3. AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. The Court examined a case in which the plaintiff, AMN, a healthcare agency that recruits traveling nurses to work in care facilities across the country, appealed an injunction barring the enforcement of non-solicitation provisions included in Confidentiality and Non-Disclosure contracts signed by the defendants, four travel nurse recruiters, as terms of employment with AMN. The provisions were meant to prevent the ex- AMN recruiters from seeking to hire current AMN employees for one year after their departure from the company. The court case
- 4. AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. Under circumstances unique to each individual, the defendants had left AMN to work for Aya, another supplier of temporary nursing services. The suit also brought against the defendants accusations of misappropriation of confidential information. AMN claimed that the identities and contact information of its traveling nurses were "trade secrets," which their former recruiters had unlawfully used to grant Aya a business advantage. The court case
- 5. Unenforceable under California law Defendants were subsequently granted relief from AMN's non-solicitation provision, which was ruled unenforceable under California law. The AMN Court referred to Edwards v. Arthur Andersen LLP, a 2008 case where the Ninth Circuit determined that even contracts which "partially or "narrowly" restrict a former employee's ability to practice their trade are void. Both rulings relied heavily upon California Business and Professions Code Section 16600 Who won?
- 6. California Businessand Professions Code Section 16600 nullifies "every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind."
- 7. The Court of Appeal's Conclusion The Court of Appeal concluded that the provision "clearly" restrained the defendants' ability to carry out professional duties, and could even limit their compensation, since they would be unable to recruit nurses currently on temporary assignment with AMN. It was ruled that the identities and contact info of nurses employed by AMN were accessible to Aya because many of the nurses in question had already applied to Aya before working with AMN, while others had posted their contact information on social media and other easily accessible public forums. The ruling