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Commercial · Trade secrets
Trade secrets and restrictive covenants
Trade secret and restrictive covenant cases ask whether a former employee, partner or competitor took confidential information or broke a promise not to hire or solicit. Fernald & Zaffos litigates these disputes for businesses in California and Nevada, and enforced a no-hire clause for a national hospital staffing company in arbitration.
Leads this practice
Brandon C. Fernald · Founding Partner
Lead trial counsel in jury trials in Los Angeles Superior Court. Admitted in California, Nevada, North Carolina and Illinois.
Leads this practice
Adam P. Zaffos · Partner
More than 25 years of complex litigation, including business litigation and unfair competition matters. Admitted in California.
Trade secrets
California’s Uniform Trade Secrets Act protects information that has value because it is not generally known and that the owner takes reasonable steps to keep secret (Civ. Code § 3426.1). Federal law adds a claim under the Defend Trade Secrets Act (18 U.S.C. § 1836). Remedies include injunctions, damages and, for willful misappropriation, exemplary damages and fees.
Restrictive covenants
California voids most employee non-compete agreements (Bus. & Prof. Code § 16600), and courts have extended that to many employee non-solicitation clauses. Contracts between businesses are treated differently: restraints in business-to-business agreements, such as a no-hire clause in a staffing contract, are judged under a rule of reason (Ixchel Pharma v. Biogen (2020) 9 Cal.5th 1130). Nevada allows reasonable non-competes for salaried employees (NRS 613.195).
A recent result
We represented a national hospital staffing company in a suit against a hospital to enforce a no-hire clause in its staffing contract. After a three-day arbitration, our client prevailed on all claims.
Act fast
Injunctions depend on speed
If a former employee left with confidential information, preserve devices and logs and call promptly. Courts weigh delay when deciding whether to grant a restraining order.
Commercial results
Commercial contract · Arbitration
Prevailed on all claims
Enforced a no-hire clause for a national hospital staffing company
Three-day arbitration
Prior results do not guarantee a similar outcome.
Common questions
Don’t see yours? Call (323) 410-0300.
Can I stop a former employee from working for a competitor?
In California, generally not through a non-compete. You can act if the employee took trade secrets or is using confidential information.
Are no-hire clauses enforceable?
Between businesses, sometimes. California judges business-to-business restraints under a rule of reason. We enforced a no-hire clause in arbitration for a staffing company. Prior results do not guarantee a similar outcome.
What counts as a trade secret?
Information with value because it is not generally known, such as customer lists, pricing or formulas, that the company takes reasonable steps to protect.
A former employee says we are restricting them unfairly. What now?
Review the agreements against current California law. Since 2024, trying to enforce a void non-compete can expose an employer to a lawsuit (Bus. & Prof. Code § 16600.5).
Related
The information on this page is general and is not legal advice. Contacting the firm does not create an attorney-client relationship. Prior results do not guarantee a similar outcome.