Noncompete agreements are commonly used by many companies in California to prevent former employees from sharing trade secrets and other valuable information with competitors. Many companies require an employee to sign a noncompete clause during the negotiation process. Noncompete clauses aren’t infallible and sometimes employees want to dispute the legitimacy of the clause once they decide to leave a company. This situation led to a lawsuit against Focus Financial Partners, a wealth management firm based in San Francisco.
What led to the lawsuit?
The lawsuit against Focus Financial Partners was filed by NKSFB, a well-known Hollywood business management firm. Focus Financial Partners is the parent company of NKSFB. Around 50 employees of NKSFB filed a lawsuit to get their noncompete clauses invalidated. They claim that these clauses prevent them from finding employment in their field if they leave the company.
Focus Financial Partners is now faced with proving the legitimacy and necessity of the noncompete clauses signed by the employees of NKSFB. The legalities of the noncompete clauses may be related to a business acquisition from 2018 that created a new LLC, which the employees believe led to an expiration of the noncompete agreements in April of this year. Focus Financial Partners will work with their legal team to fight back against the employees’ claims.
Defense for employment disputes
When a business finds itself facing a lawsuit from employees, it’s essential to work with a legal team to form a defense. Whether the dispute is based on noncompete agreements or other clauses, the employer must take steps to protect their interests. California businesses facing a lawsuit filed by a current or former employee should seek advice from an attorney that’s well-versed in the business laws in the state.
