California

Non-Compete Agreement in California: What You Need to Know

California has the strongest anti-non-compete laws in the United States. Non-compete agreements are void and unenforceable under Business & Professions Code Section 16600. Learn what protections are available instead.

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Legal Requirements in California

Non-compete agreements are VOID under Business & Professions Code Section 16600

SB 699 (2024) extends California protections to out-of-state employees working for California companies

AB 1076 (2024) reaffirms the prohibition and adds enforcement mechanisms

Employers cannot require employees to sign non-competes as a condition of employment

Employers may not threaten enforcement of void non-compete agreements

Key Statutes & Regulations

Business & Professions Code § 16600
SB 699 (2024) — out-of-state application
AB 1076 (2024) — enforcement reaffirmation
Business & Professions Code §§ 16601-16602 (business sale exception)

Common Pitfalls

•Attempting to use another state governing law to enforce a non-compete against a California employee
•Confusing non-compete restrictions with trade secret protection — trade secrets CAN be protected
•Including non-solicitation of employees clauses — these may also be void under Section 16600
•Not understanding that the ban applies to independent contractors as well, not just employees

Local Terminology

Section 16600: The foundational California statute making non-competes void
SB 699: 2024 law extending California non-compete prohibition to out-of-state employees of CA companies
Business Sale Exception: The narrow exception allowing non-competes in connection with the sale of a business

How California Differs

California is the strictest state — non-competes are categorically void, not just disfavored

The narrow exception for business sales (B&P Code § 16601-16602) is the only valid non-compete in California

SB 699 extends California rule to employees anywhere if the employer is California-based

California allows trade secret protection and non-solicitation as alternatives

Frequently Asked Questions

Are non-competes enforceable in California?

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No. California Business & Professions Code Section 16600 makes non-compete agreements void and unenforceable, with very limited exceptions (primarily the sale of a business). This applies to employees, independent contractors, and anyone else asked to sign a non-compete in California.

What if I signed a non-compete while working in another state but moved to California?

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California courts generally will not enforce non-compete agreements against California residents, even if the agreement was signed in another state. SB 699 (2024) further strengthens this by extending California protections to employees working for California-based companies regardless of where they are located.

What can I use instead of a non-compete in California?

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California businesses commonly use: (1) NDAs to protect specific confidential information and trade secrets, (2) non-solicitation of clients clauses (enforceability varies), (3) IP assignment agreements, and (4) garden leave provisions (paid leave during a transition period). Focus on protecting specific information rather than restricting employment.

Can my employer threaten to enforce a non-compete in California?

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No. Under AB 1076 (2024), employers cannot even threaten to enforce void non-compete agreements against current or former employees. Doing so may expose the employer to liability. If you are asked to sign a non-compete in California, you have the right to refuse.