California Employment Agency NonCompete Issues

Quick Summary

The employment agency industry is a mass violator of California law, often using patently illegal contracts to try to keep employees from fleeing to better agencies.

Noncompete terms are illegal in California, even if used by a staffing agency.

Law Review

I have reviewed hundreds of noncompete agreements and far and away the industry with the most violations if the staffing or employment agency industry.

Often, they don't seem to care. All they want is to intimidate workers to keep them from moving to another agency or working directly with a customer.

Sometimes, as seen in this lawsuit my office filed the agency needs to be sued. In that case, at the conclusion of trial the judge said he intended on awarding severe damages.

Some of the unlawful tricks employed by staffing agencies:

- Prohibiting employees from working through any other agency.

- Prohibiting employees from working directly with the customer.

- Imposing fines if an employee goes to work for a customer.

- Penalizing customers if they hire an employee.

- Telling employees their pay rates are confidential.

- Claiming out of state law applies to make a noncompete legal.

All of these actions are illegal.

Noncompete terms that restrict the movement of an employee are illegal in California. Whether the restriction is a ban, a fine, or a penalty, it is not allowed.

California courts also ignore contract terms in this situation purporting to apply non-California law.

For instance, if the staffing agency is headquartered in Minnesota but the employee is working in California, even if the agency contract refers to Minnesota law that will be ignored in California. The public policy of the state does not allow one company to tell another company who it can hire.

The Trade Secret Scam

Another common tactic employed by staffing agencies it to claim their customers are confidential and trade secrets.

This is usually absurd. I have seen a temp agency claim a government entity is a trade secret - a public entity with publicly posted job listings.

Usually, employment agencies are competing with each other to fill publicly listed job postings. Jobs often last for years, which gives new meaning to the phrase 'temporary agency.'

The fact is, the employment agency is often only the employer in name only, writing a paycheck each week and having no other contact with the employee. The real employer is the customer, and the name of the employer, fact of employment, etc., is not secret from anyone.

Bottom line: in my experience many employment agencies could care less about the law and will do anything to literally extort a few bucks and try and keep employees on their payroll.

Worse, agencies often prey upon those with limited employment experience or are foreign employees scared the agency will have them deported.

When dealing with an employment agency you will often need an attorney to evaluate your contract, situation, and to prepare advice and any needed letters to get the employment agency to follow the law.

Attorney Brian Kindsvater specializes in noncompete issues and has dealt with many employment agencies.

If you have a noncompete issue contact Mr. Kindsvater right away:

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