Out-of-state non-competes in California are not enforceable. California law voids nearly all non-compete clauses in the employment context, and that rule applies no matter where or when you signed the contract. If you signed a non-compete in Texas, New York, Florida, or anywhere else and you now work in California, your former employer cannot use it to stop you from taking a new job or starting a competing business. Legislation that took effect January 1, 2024, went further: employers who even try to enforce a void non-compete can be sued by the affected worker.
The Rule: Section 16600 Voids Non-Competes, Signing State Doesn’t Matter
California Business and Professions Code Section 16600 provides that any contract restraining someone from engaging in a lawful profession, trade, or business is void to that extent.1California Legislative Information. California Code Business and Professions Code 16600 – Contracts in Restraint of Trade California courts read that language as broadly as it sounds. A non-compete is void regardless of how narrowly it was drafted, how short the restricted period, or how small the geographic area. If the practical effect is to keep you from working for a competitor or launching one, it doesn’t survive here.
Section 16600.5, effective January 1, 2024, closes the door on the out-of-state argument specifically. It declares that any contract void under California’s non-compete chapter is unenforceable “regardless of where and when the contract was signed,” and bars employers from attempting to enforce such a contract “regardless of whether the contract was signed and the employment was maintained outside of California.”2California Legislative Information. California Code Business and Professions Code 16600.5 The statute’s legislative findings state directly that California’s public policy against restraints of trade overrides other states’ laws when a worker seeks employment in California.
Choice-of-Law and Forum Clauses Can’t Save the Agreement
Most out-of-state non-competes include a choice-of-law clause naming the state where the contract was signed. In ordinary contract disputes, courts honor those clauses. Non-competes are the exception. California treats worker mobility as a fundamental public policy, and courts will not apply another state’s law to validate an agreement that California law makes void. An employer cannot contract around Section 16600 by picking a friendlier jurisdiction’s rules.
Some employers try a different route: a forum selection clause requiring the dispute to be litigated somewhere else, where the non-compete might be enforced. California Labor Code Section 925 blocks that move. It prohibits employers from requiring workers who primarily live and work in California to agree, as a condition of employment, to litigate California-arising claims outside the state or to waive California law protections.3California Legislative Information. California Code Labor Code 925 Any provision violating this rule is voidable at the employee’s request, and once voided, the dispute is resolved in California under California law. This covers both litigation and arbitration.
Section 925 has one narrow exception: it doesn’t apply if the employee was individually represented by their own attorney when negotiating the forum or choice-of-law provision. Most employees sign non-competes as a take-it-or-leave-it condition of a job offer, without independent counsel, so this exception rarely matters.
What You Can Do If an Employer Tries to Enforce One
Before 2024, California’s ban was strong on paper but the remedies were thin. Two bills changed that.
SB 699: You Can Sue and Recover Fees
Senate Bill 699, codified as Section 16600.5, does more than declare out-of-state non-competes void. An employer that enters into or attempts to enforce a void non-compete commits a civil violation.4California Legislative Information. California Senate Bill 699 – Contracts in Restraint of Trade Employees, former employees, and prospective employees can sue for injunctive relief, actual damages, or both. A worker who prevails is entitled to reasonable attorney’s fees and costs.2California Legislative Information. California Code Business and Professions Code 16600.5
The fee-shifting piece changes the practical picture. A cease-and-desist letter from a former employer’s lawyer used to be intimidating largely because fighting it meant paying your own counsel. Now that a prevailing employee recovers fees, employers who send threatening letters or file enforcement suits over agreements they should know are void face real exposure.
AB 1076: Employers Must Notify Workers the Clause Is Void
Assembly Bill 1076 required employers to send written notice by February 14, 2024, to all current employees and former employees hired after January 1, 2022, informing them that any non-compete clause in their contract is void.5California Legislative Information. AB-1076 Contracts in Restraint of Trade – Noncompete Agreements Failing to send the notice constitutes unfair competition under California’s Unfair Competition Law. If you fall in that group and never received the notice, that’s a separate violation you can raise.
Remote Workers and Multi-State Situations
Remote work has muddled the question of which state’s law governs. SB 699’s language is deliberately broad, barring enforcement “regardless of whether the contract was signed and the employment was maintained outside of California.”2California Legislative Information. California Code Business and Professions Code 16600.5 The legislative findings add that California’s policy applies “even if the employee had signed the contractual restraint while living outside of California and working for a non-California employer.”
If you live in California and work remotely for a company headquartered elsewhere, California’s protections almost certainly apply. Section 925 backs that up by requiring workers who primarily reside and work in California to have their disputes resolved here under California law.3California Legislative Information. California Code Labor Code 925 The harder cases involve workers who split time between California and another state, or who live elsewhere but perform some work in California. Courts have not fully mapped those boundaries, and multi-state employers are still testing jurisdictional challenges.
What the Ban Does Not Cover
The rule voiding non-competes doesn’t erase every restrictive clause in an employment contract. A few categories still stand.
NDAs and trade-secret protection. An employer can still prohibit you from taking or sharing proprietary formulas, customer data, source code, or other information that qualifies as a trade secret. An NDA restricts what you can share, not where you can work.
Some non-solicitation clauses, narrowly. A non-solicitation clause can survive if it is directly tied to protecting a trade secret, such as a confidential customer list. But California courts have increasingly treated broad non-solicitation clauses as non-competes in disguise. In AMN Healthcare v. Aya Healthcare Services, a California appellate court held that a clause prohibiting a former employee from soliciting the company’s workers was void under Section 16600.6Justia. AMN Healthcare Inc. v. Aya Healthcare Services Inc. If a non-solicitation clause is broad enough to effectively stop you from doing your job, expect a California court to treat it the same as a non-compete.
Sale-of-business situations. California allows non-competes in three ownership contexts: selling the goodwill or substantially all assets of a business,7California Legislative Information. California Code Business and Professions Code 16601 a partner leaving or a partnership dissolving,8California Legislative Information. California Code Business and Professions Code 16602 and an LLC dissolving or a member departing.9California Legislative Information. California Code Business and Professions Code 16602.5 These exist so that a buyer paying for goodwill isn’t undercut by the seller opening a competing shop next door. If you are a regular employee with no ownership stake, none of these exceptions reach you.
Is There a Federal Ban to Fall Back On?
No. The Federal Trade Commission issued a rule in 2024 that would have banned most non-competes nationwide, but a federal district court blocked it. In 2025, the FTC formally moved to accede to the vacatur of the rule.10Federal Trade Commission. Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule Enforceability still turns on state law, which is why California’s position matters so much for anyone signing a non-compete elsewhere and then working here.