Amazon Gets Sued for Trying to Impose Noncompete Agreements on Employees

In California, it has long been the law that noncompete agreements are illegal. The federal government followed suit, banning them nationally as of 2024. But according to a recent lawsuit, one company, Amazon, may be doing its best to circumvent the bans, a practice that employees should look for.

Lawsuit Alleges Noncompete was Disguised

The lawsuit, which took place in Washington which like California, bans noncompete agreements, alleges that amazon employees are still being forced to agree to noncompete agreements, despite the fact that they are banned.

The lawsuit alleges a practice that is likely being used by other employers—hiding noncompete agreements in larger documents, or using language “like” a noncompete agreement, to effectively have the same result as a noncompete agreement.

The workers in the lawsuit allege that the employment contract they signed with Amazon prohibited them from getting any business from any customer that they worked with or for while at Amazon. It said that employees could not suggest or encourage others to stop working with or doing business with Amazon. The agreements also said that should the employees leave for new employment, they should show their new employees the restrictions—a practice that is often used for traditional noncompete agreements.

The lawsuit says that the language of the agreement may not say it’s a noncompete agreement—but that’s essentially what it is, when the language is read and if the restrictions were fully followed. In other words, to quote a cliché: if it looks like a duck, swims like a duck, and quacks like a duck, then it’s a duck.

A Common Practice

This is likely happening to a lot of workers, both in other states, and here in California. Yes, employers can restrict you to some extent, for example, by requiring that you don’t disclose or disseminate sensitive trade secrets. But when the language of an agreement, read in total, has the cumulative effect of restricting where you can work after you leave employment, the provision is likely illegal.

California’s Ban on Noncompete Agreements

California’s law prohibiting these agreements is so strong, that as of an amendment passed in 2024, any employee who has an employer try to push or force a noncompete agreement on them, can sue the employer or potential employer for monetary damages, and can also get their attorneys fees in fighting against the noncompete agreement.

Any employee who signed such an agreement before it was banned in California, has to receive a notice from their employer, telling them that the noncompete agreement is void and will not be enforced.

The only time when noncompete agreements are allowed in California is in the sale of a business-that is, someone who buys a business from someone else, can require that the seller not compete with the buyer, as a condition of the sale.

Is your employer trying to force an illegal agreement or noncompete agreement against you? Contact the San Jose employment law attorneys at the Costanzo Law Firm today.

Sources:

seattletimes.com/business/amazon/amazon-accused-of-violating-washingtons-ban-on-noncompete-agreements/

cda.org/newsroom/hiring-firing/noncompete-agreements-are-void-and-prohibited-by-law-in-california/