"Legitimate business interests are not mutually exclusive," you say?
To be enforceable, noncompete agreements must, among other things, serve a "legitimate business interest." What is a legitimate business interest? Most states recognize trade secrets, other confidential business information, and customer goodwill as legitimate business interests that may properly be protected. (See Back to the Basics... Terms of Art.) This is not to say there is not overlap, however, and that's the key: There is overlap.
So, what does that mean and why is it significant? The California Court of Appeal recently issued a decision The Retirement Group v. Galante that explains it. But first some background...
Two things are important to know about California. First, California does not permit employee noncompete agreements except (possibly) to protect trade secrets - although the California Court of Appeal had something to say about that too. (More on that another time.) Second, California (which is not unique in this regard) treats nonsolicitation agreements as noncompete agreements. Therefore, in California, they generally will not be enforced, while in other states, they will be analyzed in the same fashion as traditional noncompete agreements are analyzed. (The scrutiny applied, however, is typically a bit lower, as nonsolicitation agreements do not impede individual choice of employment to the same extent as the outright ban of a noncompete agreement.)
With that background, even though nonsolicitation agreements are not permitted in California (and thus, that might be considered to be the end of the case), the court nevertheless found that it was proper to prevent a former employee from soliciting customers based on trade secret misappropriation law and/or unfair competition law - as opposed to based on some contractual obligations. The court explained that "a former employee may be barred from soliciting existing customers to redirect their business away from the former employer and to the employee's new business if the employee is utilizing trade secret information to solicit those customers." The court further explained, "[I]t is not the solicitation of the former employer's customers, but is instead the misuse of trade secret information, that may be enjoined."
What is true in California in this regard is true elsewhere: An employee's solicitation of an employer's customers may not only jeopardize the employer's goodwill, it may implicate the employer's trade secrets and confidential information, thus providing the employer with another arrow in its quiver to prevent such conduct.