Are California Non-Compete Agreements Enforceable? In almost every employment situation, no. California law generally makes non-compete agreements unenforceable, even when they are limited in duration or geographic scope. Under California Business and Professions Code § 16600, employers generally cannot prevent employees from working for competitors or starting competing businesses after leaving their jobs. Since January 1, 2024, it is also unlawful for an employer to require one or to try to enforce one.Table of Contents
If your employer has asked you to sign a non-compete agreement, or a former employer is threatening legal action because you accepted another job, California law provides strong protections. Although limited statutory exceptions exist, most employee non-compete agreements are void. This article explains California’s non-compete laws, the exceptions, what changed in 2024, and what you can do if an employer tries to restrict your ability to work.
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Danielle Langella is an Associate Attorney at Abramson Labor Group, where she helps California employees stand up for their rights at work. Before joining ALG, Danielle worked at Good American as a Marketing Coordinator and Assistant to the Brand Director,…
Non-compete agreements may appear in offer letters, employment contracts, or other agreements under names such as “covenant not to compete” or “restrictive covenant.” You may be dealing with an unlawful non-compete if:
This is common in competitive markets like tech, sales, healthcare, and executive roles.
California has prohibited most non-compete agreements for more than 150 years. Under Business and Professions Code § 16600, contracts that restrain someone from engaging in a lawful profession, trade, or business are generally void, subject to limited statutory exceptions. In Edwards v. Arthur Andersen LLP (2008), the California Supreme Court confirmed that employee non-compete agreements are unenforceable even when narrowly limited in duration or geographic scope. An employer cannot make an otherwise unlawful non-compete enforceable simply by restricting it to a short period or a small geographic area.
Two laws that took effect on January 1, 2024 strengthened these protections.
Business and Professions Code § 16600.1 expressly prohibits employers from including unlawful non-compete provisions in employment contracts or requiring employees to enter into them. Violations constitute acts of unfair competition. The law also required employers to notify affected current employees and former employees employed after January 1, 2022, that their unlawful non-compete provisions were void. Employers were required to provide this individualized written notice by February 14, 2024.
Business and Professions Code § 16600.5 further prohibits employers from attempting to enforce non-compete agreements that are void under California law, regardless of where or when the agreements were signed. The statute also addresses agreements involving employment outside California, limiting an employer’s ability to rely on another state’s laws to enforce restrictions prohibited under California law. However, disputes involving employees or employers in multiple states may still raise questions about jurisdiction and which state’s law applies.
California law recognizes limited exceptions to its general prohibition on non-compete agreements. These exceptions primarily involve the sale of a business or the dissolution or termination of certain business ownership relationships, rather than ordinary employment.
| Exception | Who it covers |
|---|---|
| Sale of a business (§ 16601) | Someone who sells the goodwill or ownership of a business |
| Partnership dissolution (§ 16602) | A partner leaving or dissolving a partnership |
| LLC sale or dissolution (§ 16602.5) | A member selling an interest in or dissolving an LLC |
These exceptions apply only when the statutory requirements are satisfied. They do not give employers a general right to restrict employees from working for competitors.
If you are an employee who does not own or sell a qualifying business interest, these exceptions generally will not apply to you. An employer also cannot make an otherwise unlawful employee non-compete enforceable simply by labeling it a business sale or ownership agreement.
California has long prohibited most employee non-compete agreements, but laws that took effect on January 1, 2024 strengthened workers’ protections and expanded the remedies available when employers violate those protections.
Previously, employees could challenge unlawful non-compete agreements through legal action, including requests for declaratory or injunctive relief. The 2024 laws expressly prohibit certain employer conduct and provide additional avenues for employees to seek relief.
| Before 2024 | Since January 1, 2024 | |
|---|---|---|
| Status of the clause | Most employee non-competes were void | Most remain void, and including or requiring unlawful provisions is expressly prohibited |
| Employee Lawsuits | Employees could challenge unlawful agreements | Employees have an express statutory right to sue for violations of § 16600.5 |
| Remedies available | Declaratory relief, injunctions, and other remedies depending on the claim | Expressly includes injunctive relief, actual damages, and attorney’s fees and costs for prevailing plaintiffs |
| Out-of-state contracts | Interstate disputes could involve competing state laws | California expressly prohibits enforcement of agreements void under its law, regardless of where or when they were signed |
Under § 16600.5, a current, former, or prospective employee can bring a private lawsuit for an injunction or actual damages, and a prevailing employee recovers reasonable attorney’s fees and costs. A prevailing plaintiff is also entitled to recover reasonable attorney’s fees and costs.
Non-compete provisions may also appear in severance agreements or other documents presented when employment ends. Review these restrictions carefully before signing. Although California generally follows at-will employment, that does not give employers permission to require unlawful non-compete agreements.
California law generally prohibits employers from restricting where employees can work after leaving their jobs. However, employers may still protect legitimate business interests, including trade secrets and certain confidential information.
| Void or unlawful | Generally Permitted |
|---|---|
| Barring you from working for a competitor after you leave | Protecting genuine trade secrets |
| Barring you from an entire field or industry | Enforcing lawful confidentiality agreements that do not improperly restrict future employment |
| Attempting to enforce a non-compete that is void under California law, even if signed in another state | Enforcing qualifying non-compete agreements connected to the sale of a business under a statutory exception |
Customer and employee non-solicitation agreements also require careful review. California courts have invalidated many provisions that restrict former employees from soliciting customers or coworkers, particularly when they operate as restraints on lawful competition. However, enforceability depends on the specific language and circumstances.
An employer cannot avoid California’s prohibition simply by calling a non-compete a confidentiality or non-solicitation agreement.
Generally no, if the agreement is void under California law. Under Business and Professions Code § 16600.5, employers cannot enforce non-compete agreements that violate California law, regardless of where or when they were signed. If you currently live and work in California, you may be protected even if you signed the agreement while working elsewhere. However, disputes involving multiple states can raise additional legal questions.
Most employee non-compete agreements are void under Business and Professions Code § 16600, even if you voluntarily signed the agreement or its restrictions are narrowly written. Limited statutory exceptions apply, primarily involving the sale of a business or certain ownership interests. Other provisions in your contract, such as lawful confidentiality obligations, may still be enforceable.
California law prohibits employers from requiring employees to enter into unlawful non-compete agreements. If your employer fires, disciplines, or otherwise penalizes you for refusing to sign one, you may have grounds for a wrongful termination or other employment-related claim. Whether you have a viable claim depends on the circumstances, so keep records of what happened and consider speaking with an employment attorney.
Many non-solicitation agreements are unenforceable under California law, but the rules depend on the restrictions involved. Courts have invalidated provisions that prevent former employees from soliciting customers or recruiting coworkers when they unlawfully restrain competition. However, not every non-solicitation provision is automatically void. An employment attorney can review the specific language and explain whether it is enforceable.
Contact us for a free case evaluation, or see our California employment lawyers page to learn more.
This article is general information about California law, not legal advice. Every situation is different. For advice about your specific case, talk to a licensed California employment attorney.
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