Non-compete agreements are not enforceable in California. The state has voided them in employment contracts since 1872, and two laws that took effect on January 1, 2024, went further: employers can no longer lawfully ask you to sign one, and non-competes signed in other states don’t reach workers who live or work here. If you signed one, it almost certainly has no legal force against you.
The Statutory Ban
California Business and Professions Code section 16600 is the foundation. It says any contract that restrains someone from engaging in a lawful profession, trade, or business is void to that extent.1California Legislative Information. California Code BPC 16600 Void, not narrowed. A California court will not rewrite an overbroad clause into something reasonable. It throws the clause out.
The California Supreme Court confirmed the broad reading of that statute in Edwards v. Arthur Andersen LLP (2008), holding that employee non-competes are prohibited unless they fit a specific statutory exception, no matter how narrowly the employer drafts them.2Stanford Law School – Robert Crown Law Library. Edwards v Arthur Andersen So the old argument — that a short, geographically limited non-compete might survive because it’s “reasonable” — does not work here.
Effective January 1, 2024, the legislature amended section 16600 to write that rule directly into the statute. Subdivision (b) now requires courts to read the section broadly to void any employment non-compete that doesn’t satisfy a statutory exception, regardless of how narrowly it’s tailored.1California Legislative Information. California Code BPC 16600 The legislature called the amendment “declaratory of existing law.”
What Changed in 2024
Two bills added real teeth to the existing ban.
AB 1076: Employers Can’t Include the Clause at All
Assembly Bill 1076 added section 16600.1, which makes it unlawful for any employer to include a non-compete clause in an employment contract or to require a worker to enter one that doesn’t satisfy a statutory exception.3LegiScan. California Assembly Bill 1076 Section 16600 had long made these clauses void once signed. AB 1076 makes putting them in the contract in the first place its own violation.
The bill also required employers, by February 14, 2024, to send individualized written notice to current employees and to former employees who worked for the company after January 1, 2022, telling them any non-compete clause in their agreement is void.3LegiScan. California Assembly Bill 1076 If you never received that notice, the failure itself is a violation of the Unfair Competition Law.
SB 699: Out-of-State Non-Competes Don’t Reach Into California
Senate Bill 699 added section 16600.5. Any contract that is void under California law is unenforceable regardless of where or when it was signed.4California Legislative Information. California Code BPC 16600.5 If you signed a non-compete in Texas, then moved to California and took a competing job, your former employer cannot enforce it here.
SB 699 also gave workers a private right of action. If an employer tries to enforce a void non-compete, you can sue for actual damages and recover attorney’s fees and costs. That fee-shifting provision is the real deterrent: an employer who sends a threatening letter about a void clause is opening itself up to paying your legal bills.
If Your Employer Tries to Enforce One
Some employers, especially those headquartered outside California, still try. Others slip non-compete language into onboarding paperwork hoping workers won’t know the law.
If you’re being asked to sign an agreement that contains a non-compete clause and you refuse, and your employer fires you over it, that termination can itself be illegal. California courts have recognized wrongful termination claims based on public policy in exactly this situation. An employer cannot condition your job on your agreement to waive a statutory protection this strong.
If you already signed a non-compete and your former employer is now threatening you with cease-and-desist letters or a lawsuit, the clause is void. Under section 16600.5 you can bring your own action seeking damages and attorney’s fees. In practice, a letter from a California employment attorney citing section 16600 and the 2024 amendments is often enough to end the threats, because opposing counsel knows the clause won’t survive and that continuing to press it creates fresh liability.
The Narrow Exceptions
Three exceptions exist. All of them involve the sale or dissolution of a business interest, not an ordinary employment relationship.
- Sale of a business under section 16601. Someone selling the goodwill of a business or all of their shares in a corporation can agree not to operate a competing business in a specified geographic area, as long as the buyer keeps operating there.
- Partnership dissolution under section 16602. A departing partner can agree not to compete with the remaining partners in the area where the partnership operated.5California Legislative Information. California Code BPC 16602
- LLC dissolution under section 16602.5. A departing LLC member can agree not to compete in the area where the LLC did business.6California Legislative Information. California Code BPC 16602.5
If you’re an employee, even a senior executive, none of these exceptions apply to you unless you’re simultaneously selling an ownership interest in the company. An employer cannot recharacterize an ordinary separation as a “dissolution” to shoehorn a non-compete into one of these categories.
What Employers Can Still Enforce
The ban on non-competes doesn’t strip employers of every tool. It restricts one specific type of clause: one that stops you from working for a competitor or in your field. Other restrictions can still bind you, and the line between them and a disguised non-compete is one employers cross routinely.
Confidentiality and Trade Secret Agreements
Employers can require you to sign a non-disclosure agreement protecting genuine trade secrets. Under the California Uniform Trade Secrets Act, a trade secret is information that derives economic value from being kept secret and is subject to reasonable efforts to keep it that way. Formulas, proprietary processes, non-public pricing data, and internal business strategies can qualify.
The distinction matters. A confidentiality agreement restricts what information you can use or share. It does not restrict where you can work. An NDA saying “you cannot take our client list to a competitor” is generally enforceable. One saying “you cannot work for any company in our industry for two years” is a non-compete dressed up as an NDA, and it’s void.
If you actually misappropriate trade secrets — downloading a proprietary client database on your way out, for instance — the former employer can seek an injunction and damages. But it has to prove the information really was a trade secret: not generally known, and protected by real internal safeguards. A customer list assembled from public sources won’t qualify.
Customer Non-Solicitation Clauses
A narrow clause preventing you from soliciting customers by using your former employer’s trade secret information may be enforceable. The operative phrase is “using trade secret information.” A clause saying “you cannot contact any customer you worked with” is likely too broad and functions as a non-compete. A clause tied specifically to the use of confidential customer data has a better chance of surviving.
Employee Non-Solicitation Clauses
This is genuinely unsettled. An older California appellate decision, Loral Corp. v. Moyes (1985), held that restricting solicitation of former co-workers did not violate section 16600. A 2018 appellate decision, AMN Healthcare v. Aya Healthcare Services, cast serious doubt on that, holding that employee non-solicitation provisions violated section 16600 because they restrained the defendants from practicing their profession. Federal courts in California have largely followed AMN. Loral has not been formally overruled, but the trend is clearly against enforcing these clauses.
The Federal Picture
The Federal Trade Commission’s attempt to ban non-competes nationwide is over. A federal judge in Texas blocked the FTC’s rule in August 2024, the FTC withdrew its appeals in September 2025, and on February 12, 2026 it removed the rule from the Code of Federal Regulations.7Federal Register. Revision of the Negative Option Rule, Withdrawal of the CARS Rule, Removal of the Non-Compete Rule For California workers this changes nothing, because state law is already stronger than the proposed federal rule would have been. If you work in California but have coworkers in other states, though, keep in mind that their non-competes may be enforceable even though yours is not.