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I have been doing freelance on the side, and my boss just came to all of the employees and is telling us to sign a non-compete agreement, demanding that we do not conduct any freelance work. Specifically, this is in California, which has different laws than most other states, so please only give advice that you know pertains to this state specifically.

Note, I am not doing any work clients that company has done business with, is doing business with, or is planning on doing business with. They're theory is that we should be bringing new clients to the company and not working for them directly, and that by working for them directly we are competing with them.

The California laws in general seem to protect employees' rights here, as long as we are not using resources that are in any way connected with the employer.

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First: I am NOT a lawyer...

Of course your Boss can tell you to sign such a contract. And of course you can decide to sign it or take a job somewhere else. Now, if you don't sign it, your Boss might start to dislike you. He can't fire you for not signing it, but he could become very aware of the work you do and find other reasons to kick you out. You could point out to your boss that such a clause in the contract is void and then you'll be marked as a troublemaker. You could sign it, then break it and risk possible legal problems.

Of course, the purpose of a non-compete contract is to keep you from working for someone else too, doing the exact thing as you're doing for your current employer.

What you need to be aware of is that your boss can cause you a lot of trouble if you don't sign it or when you break it. Mostly legal trouble but it would probably include unemployment. While you can probably win in court if it ever gets this far, it will also mean a long, troublesome battle that can last months, even years. Plus, your Boss will be a bad reference.

The problem for your Boss is that this contract will probably not hold in court! It will be completely void, even if you signed it. So when you "break" this contract, he can try to take you to court and claim a large amount in damages. Will he get them? Chances are he'll just lose, ending up paying you. But he might be willing to pay up for the costs to prevent you from competing with his business or just to cause you additional harm. Besides, you will have to explain to the judge why you accepted this no-compete contract in the first place.

The best thing would be to contact your lawyer. If you don't have one, find one. This lawyer will probably advise you to talk with your Boss first about the freelance jobs that you're already taking. Together, you can negotiate to get a better contract, since he will be assured that you won't do anything to compete with his business. If he just continues to push this contract through, then be aware that you might end up bound to it once you sign it, even though it's technically illegal.

If this contract is illegal then your Boss is making a mistake and the best thing to do is to help him fix it.

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I believe blanket non-competes are invalid in California, based on:

    California Business and Professions Code section 16600:

    Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

    <http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=16001-17000&file=16600-16607>

One would want to ensure that no confidential or proprietary information is compromised.

I'm not a lawyer, but I assume if someone signed this type of non-compete in CA, the main provision would have no legal force.

One wouldn't want the employer to necessarily know however what one does in one's free time since it just makes things complicated.

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