United States: Labor & Employment Alert >> California Employee Non-Solicitation Provisions Face Unpredictability

In late 2018, the Court of Appeal for California's Fourth Appellate District reached a concerning decision for employers with restrictive covenant agreements in California. Established California law prohibits employers from entering into non-competition and customer-based restrictions with their employees other than for explicit statutory exceptions. However, case law had provided that employers could enter into contracts with their employees that would prohibit post-employment solicitation of co-workers on behalf of a new employer. In AMN Healthcare Inc. v Aya Healthcare, et al. (AMN), and in at least one additional decision, courts found precisely such provisions unenforceable, calling into question their viability and legality going forward.

AMN Healthcare Inc.v Aya Healthcare, et al.

The AMN case concerns two competing companies that provide temporary healthcare professional employees, including "travel nurses," to medical care facilities throughout the country. As a condition of employment with AMN Healthcare Inc. (AMN), employees signed agreements that prohibited them from soliciting any AMN employee, including the travel nurses who were placed on assignment, to leave AMN. These restrictions were in place for at least one year post-employment with respect to the solicitation of regular AMN employees, and lasted for 18 months in the case of soliciting travel nurses.

In 2015, AMN sued four of its former recruiters who, after joining Aya Healthcare, solicited away AMN travel nurses. The defendants claimed that the employee non-solicitation provision in their agreements improperly restrained them from engaging in their profession of recruiting, in violation of California Business and Professions Code section 16600.

The trial court held that the post-termination, non-solicitation of employee provision, if enforced, prevented former AMN employees from recruiting travel nurses and similar professionals who were on temporary assignment with AMN, even if those same travel nurses had applied to, were known by, and/or had previously been placed by a competitor of AMN. Accordingly, the trial court held that this constituted an unlawful restraint on trade and enjoined AMN from enforcing the employee non-solicitation provision. The Court of Appeal affirmed.

Aftereffects on Employee Non-Solicitation Provisions

The AMN decision has raised concern among California employers who feared they would no longer be able to rely on employee non-solicitation provisions to protect themselves against poaching by former employees.

The Court of Appeal's decision emphasized, among other things, that the restriction on the defendants' ability to solicit AMN employees would restrain the defendants from engaging in their chosen profession – recruiting. This stands in contrast to the employee non-solicitation provisions that have been upheld in California and across the country in industries other than recruiting, where the employees against whom the provisions are enforced can practice their chosen profession without needing to solicit employees from their former employers.

The AMN court contrasted the role of a recruiter from that of an executive officer, such as the defendant whose non-solicitation agreement was at issue in Loral Corp. v. Moyes (Loral), the precedential 1985 case endorsing contractual employee non-solicitation provisions in California. There, the Court of Appeal determined that employee non-solicitation provisions only "slightly" impact employment opportunities and therefore do not defy Section 16600's prohibition of contracts "by which anyone is restrained from engaging in a lawful profession, trade, or business." This distinction may be used by California courts to discourage the expansion of the AMN decision outside the scope of the recruiting industry – a unique profession in which solicitation is part and parcel of the job.

Unfortunately for employers, however, one court has already taken a more expansive reading of the AMN case. In January 2019, the U.S. District Court for the Northern District of California in Barker v. Insight Global (Barker) reconsidered its own prior decision in which it had dismissed claims, in part, because of a finding that employee non-solicitation provisions are enforceable under California law. In reconsidering that prior decision, the court held that it was "convinced by the reasoning in AMN that California law is properly interpreted . . . to invalidate employee non-solicitation provisions." The Barker court added that it was "not persuaded that the secondary ruling in AMN finding the non-solicitation provision invalid under Loral based upon these employees' particular job duties abrogates or limits the primary holding" that the non-solicitation provision is void as a matter of law.

While Barker remains the only reported case interpreting the AMN decision so far, and it is notably within the bounds of the recruiting industry (Insight Global is a staffing company), we will be watching the dockets closely to assess how the jurisprudence develops regarding employee non-solicitation provisions in California.

In light of the possibility that the AMN case may render all employee non-solicitation provisions unenforceable, California employers must be cautious when including these provisions in any employment or confidentiality agreements. The consequences of the use of a standard restrictive covenant agreement can be severe in California, even if intended only for deterrent effect.

Unlike most jurisdictions, in California an employer that enters into an unenforceable restrictive covenant is violating law and the state's public policy. Accordingly, case law in California indicates that an employee may win a judgment against an employer for the mere inclusion of such a provision, even if the employer never intends to enforce it. With that judgment, in addition to a finding that the covenant is unenforceable, the victorious employee could seek attorneys' fees (which were awarded to the employees in the AMN case).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Masuda, Funai, Eifert & Mitchell, Ltd.
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Masuda, Funai, Eifert & Mitchell, Ltd.
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions