When it comes to the non-compete laws of California, North Carolina and the Defend Trade Secret Act of 2016 (DTSA), there are slight differences that we must take note of, for example; in California, the state laws are written in favor of the employee, as opposed to North Carolinas, where the laws are written in favor of the employer, and lastly before the DTSA was passed in 2016, there was no federally recognized law protecting trade secret misappropriation. The newly passed DTSA supplements state trade secret laws in order to define and create a system that works nation wide.
In California, non-compete laws are governed by the California Business & Professions Code § 16600-16607. Post employment non-compete agreements are unlawful in California, except if it falls under statutory expectations, those being; if a business owner sells their business entity, the seller promises not to conduct similar competing business within a specific geographical area or the seller conducts a like business in that area. In California, the burden of proof falls on the plaintiff-former employer to prove that non-compete laws apply to their case.
In North Carolina, state laws prevent a former employee from competing in the same market for a limited time after the employer-employee relationship has ended. The North Carolina Trade Secrets Protection Act (NCTSPA) describes the concept of non-consent as an act of acquiring, disclosing and using another’s trade secret information. The NCTSPA excludes from its definition of misappropriation the independent development, reverse engineering, or if the trade secret was obtained from an individual that was legally allowed to disclose it.
Before the DTSA was passed in May of 2016, the Uniform Trade Secrets Act (UTSA) was adopted my most states but was not a federally recognized policy. The DTSA authorizes litigant’s access to federal courts no matter the amount in controversy. As long as state laws are not interfered with, the DTSA authorizes limited employment restrictions if evidence shows trade secrets are being threatened by misappropriation. It authorizes ex-parte seizure orders when injunctive relief is not enough and grants immunity to whistleblowers, which disclose trade secrets, if they cooperate with government authorities. Most importantly, the DTSA authorizes a trade secret owner to file a civil action in federal courts seeking relief for trade secret misappropriation as it relates to a product or service used in interstate or foreign commerce.
California non-compete laws are written in favor of employees and secure their right to move about freely in the job market. North Carolina (NC) laws are stricter and don’t allow for former competitors to bounce about freely in the job market. Finally, the Defend Trade Secrets Act of 2016 allows private companies to file a civil action in the federal courts against those who obtain trade secrets unlawfully and intent to use them nationally or internationally for profit.