Accountant escapes non-compete after firm’s own filings call him ‘employee’

The former partner signed, collected roughly $1 million in consideration, then resigned in October 2025. He launched a new firm, and some Aprio clients began asking to follow him. The buyer sued in Delaware in April 2026. 

One problem: the former partner lived, worked, signed, and allegedly breached the agreement entirely in California. California Labor Code Section 925 prohibits employers from forcing California-based employees to agree to litigate out of state as a condition of employment. If the clause violates the statute, the employee can void it. 

The buyer tried four arguments. The court rejected every one. 

It argued the former partner was a partner, not an employee. Applying the US Supreme Court’s Clackamas test and California’s Ramos and Strother decisions, the court found he had no management authority, no say in the merger, and minimal governance rights. It quoted Orwell: “All partners are equal, but some are more equal than others.” The company’s own filings repeatedly labelled him an “employee.” 

It argued the agreement was tied to the merger, not employment. But the buyer conceded anyone who refused to sign would not have kept their job.