Are employee non-compete agreements enforceable in Guam?
No. Guam voids employee non-compete agreements by statute. Title 18 of the Guam Code Annotated, section 88105, makes every contract that restrains someone from exercising a lawful profession, trade, or business void to that extent, except for two narrow statutory exceptions — and in Island Eye Center, Inc. v. Lombard the Supreme Court of Guam read that language as a per-se ban. On a touch screen, a tap shows all 2 sources in this group.
Guam's restraint-of-trade statute is not the product of local drafting — it is California law transplanted. Section 88105 descends from the former California Civil Code section 1673, since recodified as the heavily litigated Business and Professions Code section 16600, and the Island Eye court said so in the first case to construe the provision. On a touch screen, a tap shows all 2 sources in this group.
Because the statutes are nearly identical, the court treats California's interpretation as persuasive and adopted its strict employee-mobility reading for the non-compete before it. That means Guam, like California, does not weigh a covenant's duration or geography the way a reasonableness state does. A clause that restrains a former employee from competing is simply outside the statute and void — the court reads section 88105 as an expression of public policy favoring employee mobility .
Applying that rule, the court struck the non-compete in Island Eye, which barred an ophthalmologist from practicing for 30 months across Guam and the Mariana Islands, as void rather than narrowing it to something enforceable .
This is not a new development. Decades earlier, the Ninth Circuit applied the same statute in Shelton v. Guam Service Games and voided a Guam-wide covenant, holding that a positive legislative declaration overrode any common-law reasonableness argument .
Do not paper a Guam employee with an out-of-state non-compete form and assume a court will blue-pencil it down to something enforceable. The Supreme Court of Guam voided the non-compete in Island Eye outright, and it expressly left open whether blue-penciling an overbroad covenant is even permissible — so reformation is no safe harbor. The only reliable paths to a valid covenant are the narrow sale-of-business and partnership exceptions discussed below. On a touch screen, a tap shows all 2 sources in this group.
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Section 88105 voids every contract by which anyone is restrained from exercising a lawful profession, trade, or business, except as provided in the two following sections (sale of good will and partnership dissolution).
Every contract, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, otherwise than is provided in the next two sections, is to that extent void.
See 18 GCA § 88105.
Island Eye is the first decision of the Supreme Court of Guam to interpret 18 GCA § 88105, the territory's restraint-of-trade provision.
This is the first time we have been asked to interpret our restraint-of-trade provision.
See Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.
The Supreme Court of Guam held that 18 GCA § 88105 derives from former California Civil Code section 1673, now California Business and Professions Code section 16600, so California case law interpreting section 16600 is persuasive.
Our statute is derived from California Civil Code section 1673, since replaced by California Business and Professions Code section 16600.
See Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.
The court held that section 88105 evidences a public policy for employee mobility and every citizen's right to pursue lawful employment, mirroring California's open-competition policy.
Therefore, we hold that section 88105 evidences public policy for employee mobility and every citizen's right to pursue lawful employment or enterprise of his or her choice.
See Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.
The court held that the employee's post-employment non-compete terms were a restraint of trade in violation of 18 GCA § 88105 and void to that extent — striking the covenant rather than reforming it.
These post-employment terms are undoubtedly a restraint of trade in violation of 18 GCA § 88105 and are to that extent void.
See Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.
Applying Guam's restraint-of-trade statute, the Ninth Circuit held a covenant restraining a person from the coin-machine business throughout the Territory of Guam void, rejecting the argument that common-law partial-restraint reasonableness could save it.
Since this agreement attempted to make the prohibition and restraint complete within the Territory of Guam, it is to that extent void.
See Shelton v. Guam Service Games, 239 F.2d 902 (9th Cir. 1956).
Are customer and employee non-solicitation clauses enforceable in Guam?
Neither sits on firm ground, and a customer non-solicitation clause likely shares the non-compete's fate. No Guam decision squarely rules on a customer non-solicitation clause, but because Island Eye adopted California's section 16600 framework — under which a covenant that forecloses a former employee's ability to compete for business is an impermissible restraint — a customer non-solicit likely carries the same void risk. For clauses barring the solicitation of a former employer's staff, the Supreme Court of Guam expressly left the question of facial validity open in Island Eye. On a touch screen, a tap shows all 2 sources in this group.
Guam took its restraint-of-trade rule from California, where post-employment covenants that foreclose a worker's ability to compete are impermissible restraints regardless of how they are labeled — including the former-client service restriction the court invalidated in Edwards , the decision Island Eye relied on . Island Eye itself distinguished employee anti-raiding clauses from client non-solicits and did not separately rule on a customer non-solicitation clause, so the customer-restriction conclusion is a prediction from the adopted framework rather than a Guam holding .
Employee anti-raiding clauses — barring a departing worker from soliciting the employer's remaining staff — are the open question. In Island Eye, the employer conceded that such clauses are typically invalidated under California law, and the court resolved the dispute without deciding whether they facially violate section 88105. On a touch screen, a tap shows all 2 sources in this group.
Treat a customer non-solicitation clause in a Guam employment agreement as carrying the same void risk as a non-compete, and recognize that an employee anti-raiding clause rests on unsettled ground after Island Eye — the court declined to rule on its facial validity, and the employer there conceded California voids such clauses. Protect customer relationships and workforce stability through a properly scoped trade-secret and confidentiality program instead. On a touch screen, a tap shows all 2 sources in this group.
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The court adopted California's interpretation that post-employment covenants not to compete are impermissible restraints violating the section 16600 / section 88105 rule, relying on Edwards (which invalidated a former-client service restriction); the court did not separately decide the validity of a customer non-solicitation clause.
California courts interpret post-employment covenants not to compete as impermissible restraints of trade which violate section 16600.
See Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.
In Island Eye, the employer conceded that employee non-solicitation (anti-raiding) clauses are typically invalidated under California law as unlawful restraints of trade.
Island Eye concedes that employee non-solicitation clauses are typically invalidated under California law as unlawful restraints of trade.
See Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.
Because of the employer's concession, the court limited the appeal and did not decide whether employee non-solicitation clauses facially violate 18 GCA § 88105 — leaving the facial-validity question open.
Because of Island Eye's concession, the parties' arguments on appeal are limited to whether non-solicitation clauses facially violate 18 GCA § 88105.
See Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.
Edwards held invalid a covenant that barred the employee from serving the employer's clients, because it restrained his ability to practice his profession.
The noncompetition agreement that Edwards was required to sign before commencing employment with Andersen was therefore invalid because it restrained his ability to practice his profession.
See Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008).
Island Eye relied on Edwards's invalidation of an eighteen-month bar on serving former clients in applying California's section 16600 framework.
The Edwards court found that an eighteen-month bar on performing professional services to former clients restricted the employee's ability to practice his profession and was therefore invalid.
See Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.
Are non-competes tied to the sale of a business enforceable in Guam?
Yes, within a narrow statutory exception. Section 88106 lets a person who sells the good will of a business agree not to carry on a similar business within a specified district, city, or a part thereof, so long as the buyer continues a like business there — but courts read the geographic limit strictly. On a touch screen, a tap shows all 2 sources in this group.
The sale-of-business exception exists so a buyer can protect the good will it pays for; without it, a seller could reopen next door and take back the customer base just sold. But the covenant must be tied to a genuine sale of good will and confined to a specified district, city, or part of one .
That geographic limit has teeth. In Shelton v. Guam Service Games, the Ninth Circuit refused to fit a Territory-wide covenant within the good-will exception, reasoning that a restraint covering the entire Territory of Guam is too broad to be the specified district, city, or part the statute allows .
“By no theory could it include the entire Territory of Guam or any major portion thereof.”
Tie a Guam sale-of-business covenant to the good will actually sold and confine it to a specified district, city, or part of one — not the whole island. A covenant scoped to the entire Territory of Guam falls outside section 88106 and, under Shelton, leaves section 88105 to void it. On a touch screen, a tap shows all 2 sources in this group.
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Section 88106 permits a seller of business good will to agree not to carry on a similar business within a specified district, city, or part thereof, so long as the buyer carries on a like business there.
One who sells the good will of a business may agree with the buyer to refrain from carrying on a similar business within a specified district, city, or a part thereof, so long as the buyer, or any person deriving title to the good will from him, carries on a like business therein.
See 18 GCA § 88106.
The Ninth Circuit held that the good-will exception's geographic limit cannot stretch to cover the entire Territory of Guam, so a Territory-wide covenant falls outside the exception and is void under the general ban.
By no theory could it include the entire Territory of Guam or any major portion thereof.
See Shelton v. Guam Service Games, 239 F.2d 902 (9th Cir. 1956).
Can partners agree not to compete on dissolution of a Guam partnership?
Yes, within the second statutory exception. Section 88107 lets partners, on or in anticipation of dissolving a partnership, agree not to carry on a similar business within the same city or town where the partnership did business, or a specified part of it .
This is the partnership analogue to the sale-of-business exception, and it is drafted just as narrowly: the permissible restraint is bounded to the same city or town — or a specified part of it — where the partnership transacted business .
Scope a partnership non-compete to the same city or town — or a specified part of it — where the partnership actually did business, and tie it to dissolution. A clause reaching beyond that geography, or imposed outside the dissolution context, falls outside section 88107 and is exposed to the section 88105 ban. On a touch screen, a tap shows all 2 sources in this group.
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Section 88107 permits partners, on or in anticipation of dissolution, to agree not to carry on a similar business within the same city or town where the partnership did business, or a specified part thereof.
Partners may, upon or in anticipation of a dissolution of a partnership, agree that none of them will carry on a similar business within the same city or town where the partnership business has been transacted, or within a specified part thereof.
See 18 GCA § 88107.
Section 88105 voids every restraint on a lawful profession, trade, or business except as provided in sections 88106 and 88107, so a partnership covenant that exceeds the section 88107 exception is void.
Every contract, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, otherwise than is provided in the next two sections, is to that extent void.
See 18 GCA § 88105.
Can a liquidated-damages or penalty clause back up a Guam covenant?
Generally no. Guam's contract statute voids a clause that fixes damages for breach in advance, except where actual damages would be impracticable or extremely difficult to fix — so a penalty bolted onto a covenant cannot do work the covenant itself cannot. On a touch screen, a tap shows all 2 sources in this group.
Section 88103 sets the default rule: a contract that fixes the amount of damages in anticipation of a breach is void to that extent .
The lone exception, section 88104, permits a genuine liquidated-damages estimate only where actual damages would be impracticable or extremely difficult to fix .
Do not try to rescue a Guam non-compete with a liquidated-damages or penalty clause. The covenant itself is void under section 88105, and section 88103 independently voids a damages-fixing clause unless it meets the narrow section 88104 standard for situations where actual damages are impracticable to calculate. On a touch screen, a tap shows all 2 sources in this group.
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Section 88103 makes a contract that fixes the amount of damages for breach in anticipation of the breach void to that extent, except as provided in section 88104.
Every contract by which the amount of damage to be paid, or other compensation to be made, for a breach of an obligation, is determined in anticipation thereof, is to that extent void, except as expressly provided in the next section.
See 18 GCA § 88103.
Section 88104 permits a presumed-damages (liquidated-damages) amount only where, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.
The parties to a contract may agree therein on an amount which shall be presumed to be the amount of damage sustained by a breach thereof; when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.
See 18 GCA § 88104.
What can a Guam employer protect instead of a non-compete?
Trade secrets and narrowly drawn confidentiality. Guam has not adopted the Uniform Trade Secrets Act, so in Island Eye the Supreme Court of Guam borrowed the trade-secret definition from the territory's criminal code — 9 GCA § 43.10(f) — to govern civil misappropriation claims; that protection guards genuine secrets without restraining the employee's right to compete .
Because the Island Eye employer had no statutory trade-secret regime to point to, the court had to decide what definition applies to a civil claim. It adopted the criminal-code definition as a matter of first impression .
A confidentiality or trade-secret program protects the information rather than the employment relationship, which is why it is the durable tool a Guam employer has after section 88105 takes a non-compete off the table. The discipline it requires is precision: a confidentiality clause cannot be written so broadly that it functions as a back-door non-compete barring the employee from the field, because that would be the very restraint section 88105 voids.
The court drew that line itself. Island Eye rejected the inevitable disclosure doctrine — the theory that a departing employee will inevitably use trade secrets in a new job — precisely because it would convert trade-secret protection into a de facto covenant not to compete, and stressed that such protection is a shield rather than a sword .
Do not define confidential information so broadly that it sweeps in the employee's general skills, knowledge, and industry experience — a confidentiality clause that effectively prevents the worker from practicing their profession is a non-compete in substance and void under section 88105. Tie confidentiality to genuine secrets that meet the 9 GCA § 43.10(f) definition the Supreme Court of Guam adopted, and remember that hiring a former competitor's at-will staff is not itself misappropriation absent an identifiable trade secret. On a touch screen, a tap shows all 2 sources in this group.
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Because Guam has not adopted the Uniform Trade Secrets Act, the Supreme Court of Guam held, as a matter of first impression, that the trade-secret definition in the criminal code at 9 GCA § 43.10(f) governs civil trade-secret-misappropriation claims.
Therefore, we hold that the definition of trade secrets in 9 GCA § 43.10(f) is the definition of trade secrets for civil trade-secret-misappropriation claims.
See Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.
The Supreme Court of Guam rejected the inevitable-disclosure doctrine for trade-secret claims, reasoning that it would operate as a de facto covenant not to compete; trade-secret protection must be a shield, not a sword used to render departing employees unemployable in their field.
Trade-secret protection should be a shield, not a sword used by employers to retain its employees by threat of rendering them substantially unemployable in their field of experience or prevent workers from pursuing their livelihoods when they leave their current positions.
See Island Eye Ctr., Inc. v. Lombard, 2020 Guam 32.
What does federal law require a non-compete or confidentiality agreement in Guam to say about whistleblowers and pay?
An employee confidentiality, non-compete, or invention assignment agreement signed or updated now that governs trade secrets or other confidential information must give the Defend Trade Secrets Act whistleblower-immunity notice, and for employees the National Labor Relations Act covers, Section 7 of that Act protects concerted activity, including joining together over pay and working conditions, that a broad confidentiality clause can restrict. The employer may satisfy the notice duty by cross-referencing a qualifying policy document provided to the employee, but an employer that omits the notice may not be awarded exemplary damages or attorney fees under the Defend Trade Secrets Act in an action against an employee who was not given notice.
The notice describes a federal immunity: an individual cannot be held liable under federal or state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal. For an agreement signed or updated now, the duty to give that notice reaches any agreement with an employee that governs trade secrets or other confidential information, whatever else the agreement does.
Section 7 gives employees the National Labor Relations Act covers a statutory right to engage in concerted activity for mutual aid or protection, including joining together to improve pay and working conditions. For employees the Act covers, the Board's work-rule standard adopted in 2023 makes a rule presumptively unlawful if it has a reasonable tendency to chill employees from exercising their Section 7 rights; an employer can rebut that presumption only by showing a legitimate and substantial business interest it cannot serve with a more narrowly tailored rule. The 2023 standard may change, but the Section 7 right it enforces is statutory. State law may add its own requirements for the same clauses.
A form carried over without the immunity notice, or a cross-reference to a reporting policy the employee never received, leaves the confidentiality clause without a valid notice, so the Act's exemplary damages and attorney fees are unavailable against that employee. A Confidential Information definition that sweeps in pay and working conditions with no carve-out exposes the employer to an unfair-labor-practice finding for employees the Act covers.
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An individual is immune from criminal and civil liability under federal and state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal.
An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that— (A) is made— (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
See 18 U.S.C. § 1833(b)(1).
An employer must give notice of the trade-secret whistleblower immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A).
An employer complies with the notice requirement by cross-referencing a policy document, provided to the employee, that sets out the employer's reporting policy for a suspected violation of law.
An employer shall be considered to be in compliance with the notice requirement in subparagraph (A) if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for a suspected violation of law.
See 18 U.S.C. § 1833(b)(3)(B).
An employer that does not give the required notice may not be awarded exemplary damages or attorney fees in a trade-secret action against an employee who did not receive it.
If an employer does not comply with the notice requirement in subparagraph (A), the employer may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.
See 18 U.S.C. § 1833(b)(3)(C).
Section 7 gives employees the right to engage in concerted activities for mutual aid or protection, the statutory basis for keeping discussion of pay and working conditions outside confidentiality restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title.
See 29 U.S.C. § 157 (NLRA § 7).
The National Labor Relations Board protects the right of private-sector employees, with or without a union, to join together to improve wages, benefits, and working conditions.
Established in 1935, the National Labor Relations Board is an independent federal agency that protects employees from unfair labor practices and protects the right of private sector employees to join together, with or without a union, to improve wages, benefits and working conditions.
See NLRB Office of Public Affairs, news release of Feb. 21, 2023 (agency mission statement).
Under the work-rule standard the Board adopted in 2023, a rule with a reasonable tendency to chill employees from exercising their Section 7 rights is presumptively unlawful unless the employer proves a legitimate and substantial business interest it cannot advance with a more narrowly tailored rule.
Under the new standard adopted in Stericycle, the General Counsel must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights. If the General Counsel does so, then the rule is presumptively unlawful. However, the employer may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.
See Stericycle, Inc., 372 NLRB No. 113 (2023); NLRB Office of Public Affairs, Board Adopts New Standard for Assessing Lawfulness of Work Rules (Aug. 2, 2023).