Employers are often faced with difficult issues when seeking to hire employees with non-competition restrictions, or seeking to enforce non-compete restrictions with respect to departing employees. The recent Amazon.com, Inc. v. Powers case — involving a former Washington-based Amazon and current California-based Google employee — illustrates how a federal court chose to resolve some of these problematic issues.

Daniel Powers worked at Amazon in Seattle, Washington from mid-2010 through July 1, 2012, during which time he was responsible for sales of Amazon's cloud computing services. At Amazon, Mr. Powers executed an agreement that, among other things, prohibited him from: (1) doing business with Amazon's actual or prospective customers for 18 months following his departure; and (2) working in any capacity that competes with Amazon. In September of 2012, Google hired Mr. Powers to work as its Director of Global Cloud Platform Sales in its Mountain View, California headquarters. Upon joining Google, Mr. Powers executed an offer letter that, for a period of 6 months, prohibited him from: (1) soliciting Amazon customers that he had material contact with during his former employment; and (2) perform certain work relating to cloud computing.

When Amazon learned that Mr. Powers joined Google, it first engaged in discussions with Google about Mr. Powers' employment. Following those discussions, Amazon sought injunctive relief through a Washington state court. After Mr. Powers successfully removed the case to a Federal District Court in Washington, Amazon moved for a preliminary injunction against Mr. Powers to enforce the non-compete restrictions.

The court denied most of Amazon's requests, and upheld the non-compete restriction only to the extent that it prohibited Mr. Powers, for a period of 9 months from the date he last had access to Amazon confidential information, from servicing any customer as to which he had obtained confidential information during his employment at Amazon (this restriction was essentially the same restriction as the one Mr. Power voluntarily agreed to upon joining Google). In making this ruling, the court made several noteworthy determinations.

The court first decided that the contractually-agreed upon choice of Washington law was the proper law to govern the dispute, even though the employee now worked and resided in California. (This choice of law determination was significant because had California law applied, the restrictions would have been unenforceable pursuant to California Bus. & Prof. Code § 16600.) The court determined that California did not have a "materially greater interest" in determining whether the restrictions should be enforceable, and therefore the contractually agreed upon choice of Washington law should govern.

With respect to the validity of the non-compete restrictions, the court next determined that the restrictions were enforceable only to the extent that they sought to prevent Mr. Powers from working with his former Amazon customers. The court also determined, however, that Amazon's attempt to uphold the more general "worldwide" ban against competition — i.e., not tied to specific customers — was unenforceable because it was unreasonable and Amazon failed to show how such a restriction was necessary to protect its business. The court further limited the length of the customer restriction to 9 months following Mr. Powers' last receipt of confidential information (and in fact criticized Amazon's attempt to impose a "one size fits all" 18 month restriction as not individually tailored to the circumstances). Coincidentally, the 9 month restriction the court imposed ended at approximately the same time the 6 month voluntary customer ban Google imposed upon hiring Mr. Powers.

There are several important takeaways from the Powers case. First, non-compete restrictions are generally disfavored, even in jurisdictions like Washington that permit such restrictions. In order to improve the chances that a restriction will be enforced, it should be as narrow and specific as practicable, and tailored to fit the employee and position in question (rather than a "one size fits all" approach). Specific customer restrictions — tied to actual relationships created during the employment relationship — are more likely to be enforced than broad, general prohibitions against competition. Second, employers who desire to hire individuals who are subject to contractual non-compete restrictions should carefully weigh the risks involved, and if they decide to move forward with bringing the employee on, take reasonable precautions to prevent even the appearance of impropriety (like Google did in this case with the specific non-compete restrictions it imposed on Mr. Powers). This complex area of the law continues to present pitfalls and challenges; early involvement of employment counsel in such situations is highly recommended.