9th Circuit: California Law Prohibits Hiring Away "For Cause" Employees

CRST is a trucking company. It had one-year contracts with new employees. CRST provided significant training to the new employees and wanted them to remain employed so they got their money's worth. CRST limited its right to terminate the employees' employment during the one-year initial agreement. In exchange, if the employees left voluntarily within the year, they refunded training costs.

Werner hired away CRST employees while they were under contract. CRST sued Werner for interference with CRST's contracts (of which Werner was aware). The Ninth Circuit held that the complaint stated a cause of action under California law governing interference with contract, and unfair business practices under California's unfair competition law. CRST Van Expedited, Inc. v. Werner Enterprises.

For employers willing to forgo "at will" employment, this case may effectively protect their investment in training and recruiting workers. The Court did not address any of Werner's potential defenses, including the privilege of competition under California law. It could be this case is another option for employers in California who cannot tie employees via non-competition agreements. Maybe employers can use renewable three-month contracts instead, so bad employees may be discharged at the end of the three-month period? The case probably has no effect when the employee chooses to leave, however. We'll see.