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  1. #1
    Join Date
    Sep 2008
    Posts
    1

    Default 300% Compete Agreement

    My question involves business law in the state of: California

    I understand non-compete agreements to be essentially illegal in the state of California. However, a CPA friend of mine told me about something called a 300% Compete Agreement-- essentially a document allowing a departing employee to purchase clients from a company (in my case, a PEO) at 300% of each account's net profit.

    I can't seem to find a standard form of this agreement to work from; if someone here could point me in the right direction, or give me some insight on the situation, it would be much appreciated.

    Thanks!

  2. #2
    Join Date
    Jan 2008
    Location
    Toledo, OH
    Posts
    16,307

    Default Re: 300% Compete Agreement

    I've never heard of such a thing, and have not been able to scrounge up any information or forms, either.

    Have you considered running this past your attorney?

  3. #3
    Join Date
    Jul 2007
    Location
    Florida
    Posts
    2,344

    Default Re: 300% Compete Agreement

    Non-compete agreements are not illegal in California. You have been misinformed. Some kinds of non-compete clauses are unenforcable in some kinds of agreements, but you have not specified what kind of agreement contains the non-compete. There is no such "300%" rule that I've ever heard of in California or any where else, but an employee and employer could agree to such a thing if they wanted to.

    If you are referring to a non-compete clause in an employment agreement, get the agreement to an attorney and get an opinion. Even if the non-compete is unenforcable, that does not mean you can steal your former employer's customers away from them. That is not only unethical, but it may prove very expensive when they sue you.

  4. #4
    Join Date
    Dec 2008
    Posts
    4

    Default Re: 300% Compete Agreement

    Actually it is illegal in California except for very special circumstances.

    1) If an owner is selling the goodwill in their business. (Business & Professions Code Section 16601).
    2) When there is a dissolution or disassociation of a partnership. (Business & Professions Code Section 16602).
    3) Where there is a dissolution of a limited liability company. (Business & Professions Code Section 16602.5).

    http://caselaw.lp.findlaw.com/cacode...600-16607.html

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