(2018) 28 Cal.App.5th 923
Court of Appeal, Fourth Appellate District, Division One · Decided November 1, 2018
01. Facts
AMN Healthcare and Aya Healthcare Services compete in placing travel nurses (28 Cal.App.5th at p. 927). Several individual defendants, former AMN travel-nurse recruiters, left AMN to work for Aya; their AMN confidentiality and nondisclosure agreement (CNDA) included a provision barring them from soliciting AMN employees — that is, AMN’s travel nurses — for 18 months (id. at p. 927). The defendants moved for summary judgment, contending the employee-non-solicitation provision was an improper restraint on their ability to engage in their profession in violation of Business and Professions Code section 16600 (id. at p. 927).
02. Procedural posture
The Court of Appeal held the employee-non-solicitation provision void under section 16600 and affirmed judgment for the defendants (28 Cal.App.5th at p. 927).
03. Issue
Whether a contractual provision barring former employees from soliciting their former employer’s employees is an unlawful restraint on trade void under Business and Professions Code section 16600.
Holding
The employee-non-solicitation provision was void under section 16600 because it restrained the individual defendants — recruiters whose profession is recruiting and placing nurses — from engaging in their chosen profession; applying Edwards, the court declined to use the older “reasonableness” analysis and held such covenants generally invalid.
05. Reasoning
Following Edwards’s broad reading of section 16600 and rejection of a reasonableness/narrow-restraint test, the court reasoned that a provision preventing recruiters from soliciting the very nurses who are the lifeblood of their trade restrained them from practicing their profession. The court questioned and declined to follow earlier authority (Loral v. Moyes) that had upheld employee-non-solicitation clauses under a reasonableness standard, concluding such clauses are void under the statute as applied here.
Practice Pointer
AMN Healthcare extended Edwards to employee (anti-raiding) non-solicitation clauses, casting serious doubt on their enforceability — and on customer non-solicitation clauses too. Employee-side counsel should challenge non-solicitation covenants of all kinds under section 16600, and employers should not assume a “reasonable” non-solicit will hold; check the current, strengthened statutory regime.
06. Open questions
AMN Healthcare disapproved the reasonableness approach for employee non-solicitation clauses, but the status of customer non-solicitation provisions and the residual role (if any) of trade-secret protection continue to be litigated, now against the backdrop of statutes (§§ 16600.1, 16600.5) reinforcing section 16600.
Cite this entry
AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923.
“[The provision required the recruiters] to refrain from soliciting AMN employees (i.e., travel nurses) for a period of 18 months.” — 28 Cal.App.5th at p. 927
Source: California Official Reports – [insert durable courts.ca.gov / Official Reports link at verification].