Are Non-Competes Enforceable in California? Your Rights Explained

In California, employee non-compete agreements are void and unenforceable, no matter how narrowly they are written or how reasonable they may seem. California Business and Professions Code Section 16600 states that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” California courts and the Legislature have interpreted this as a near-total ban: unlike most states, California does not apply a “reasonableness” test that lets employers enforce limited time-and-geography restrictions. A non-compete that bans you from working for a competitor after you leave a job is generally unenforceable in California regardless of your salary, your job title, or whether you signed it voluntarily.

California’s Rule: A Near-Total Ban, Not a “Reasonableness” Test

Most states allow non-competes if they are “reasonable” in duration, geographic scope, and the business interest they protect. California rejected that approach more than a century ago. The California Supreme Court confirmed in Edwards v. Arthur Andersen LLP (2008) that Section 16600 means what it says: California has a settled public policy in favor of open competition and employee mobility, and it does not recognize a narrow-restraint exception for ordinary employees.

This protection applies broadly. There is no separate, weaker standard for high earners or executives, and no special carve-out that lets employers enforce non-competes against highly paid workers. Because the ban is total, California did not need to create a wage threshold for “low-wage workers” the way some other states have — every employee, from a minimum-wage worker to a senior engineer, is covered.

Recent Law Changes: SB 699 and AB 1076 (Effective 2024)

Two laws that took effect on January 1, 2024 made California’s ban even stronger:

• SB 699 added Section 16600.5 to the Business and Professions Code. It makes it unlawful to attempt to enforce a void non-compete, even if the contract was signed in another state and even if the work was performed elsewhere. An employer that tries to enforce or threaten enforcement of a void non-compete commits a civil violation.
• AB 1076 codified the Edwards decision and added a notice requirement (Section 16600.1). Employers were required to notify current and former employees (those employed after January 1, 2022) in an individualized written notice, sent by February 14, 2024, that any non-compete clause in their agreement is void. Failure to send that notice is an act of unfair competition.

Critically, SB 699 gives workers a private right to act. Under Section 16600.5, an employee, former employee, or prospective employee may sue for injunctive relief, actual damages, or both, and a prevailing worker is entitled to recover reasonable attorney’s fees and costs. That fee-shifting provision is meant to discourage employers from using void non-competes as a scare tactic.

The Narrow Exceptions That Still Apply

California’s ban targets restraints on employees and ordinary workers. A few statutory exceptions remain, and they are read narrowly:

• Sale of a business (Section 16601): A person who sells the goodwill of a business, or sells substantially all of its operating assets or ownership interest, may agree not to compete within a specified geographic area where the business operates.
• Dissolution of a partnership (Section 16602): Partners may agree not to compete when a partnership dissolves or a partner departs.
• Dissolution or sale of an LLC interest (Section 16602.5): A similar exception applies to members of a limited liability company.

These exceptions are tied to genuine ownership transactions — not to ordinary employment. An employer cannot dodge the ban by labeling a routine employment restriction as a “sale” or by giving a regular worker token equity.

What About Non-Solicitation and Trade-Secret Clauses?

The non-compete ban does not mean every restrictive clause is dead. Two areas still matter:

• Trade secrets: California protects genuine trade secrets under the California Uniform Trade Secrets Act (Civil Code Sections 3426 and following). You may not steal, copy, or misuse your former employer’s confidential information, customer lists that qualify as trade secrets, or proprietary technology — even though you are free to compete.
• Employee non-solicitation clauses: California courts have treated broad agreements barring you from “raiding” or recruiting former coworkers with skepticism. After the AMN Healthcare v. Aya Healthcare decision (2018), many such clauses are treated as unlawful restraints under Section 16600.

So a confidentiality or trade-secret agreement can be valid; a clause that simply stops you from working for a competitor cannot.

The Federal Baseline and How California Compares

There is currently no federal ban on non-competes. The Federal Trade Commission issued a rule in 2024 that would have banned most non-competes nationwide, but a federal court set that rule aside, so it is not in effect. As a result, non-compete law is governed state by state, and the rules vary enormously — some states still enforce broad non-competes. California is at the protective extreme: it bars them almost entirely. (For comparison, federal wage law sets only a floor, such as the federal minimum wage of $7.25 per hour under the Fair Labor Standards Act and overtime after 40 hours in a week; California sets far higher minimums. As of 2026 California’s statewide minimum wage exceeds $16 per hour, but confirm the current figure with the state before relying on it.)

What to Do If You Are Asked to Sign — or Threatened

• Read before you sign, but know the clause is likely void. Many California employers still include non-compete language out of habit or because they operate in multiple states. Signing one does not make it enforceable, but you should keep a copy.
• Do not assume you are trapped. If a current or former employer threatens to sue you, demands that a new employer fire you, or sends a cease-and-desist letter based on a non-compete, that threat may itself violate Section 16600.5.
• Separate the non-compete from trade secrets. You can compete freely, but do not take or use confidential documents, files, or trade secrets. That is where real legal exposure lies.
• Document everything. Keep the agreement, any notices your employer sent (including the AB 1076 notice), and any threatening communications.
• Get advice. Because you may be entitled to damages and attorney’s fees, consult an employment attorney before walking away from a job opportunity.

Where to Verify

For official information, start with the California Labor Commissioner’s Office (the Division of Labor Standards Enforcement, or DLSE), which is part of the California Department of Industrial Relations (DIR). The DIR website explains worker rights and how to file wage and labor complaints. For the statutes themselves, read Business and Professions Code Sections 16600 through 16607 on the official California Legislative Information website. Because non-compete disputes often involve litigation rather than an administrative agency, an employment lawyer or the State Bar of California’s lawyer-referral resources can also help you act on your rights.

This article is general information, not legal advice. Laws change and individual facts matter, so confirm current rules with the California Department of Industrial Relations or a licensed California attorney before you act.

Official California Sources

This page is based on California employment law. Rules and figures change — verify the current details directly with the official California sources below. This is general legal information, not legal advice.

• California Labor Commissioner's Office (Division of Labor Standards Enforcement, DLSE) — Department of Industrial Relations — official California agency.
• How to File a Wage Claim — California Labor Commissioner's Office
• California Labor Code (LAB)

Federal law and local ordinances may also apply. Federal laws like the Fair Labor Standards Act set a national floor, and your city or county may add protections (such as a higher local minimum wage or paid sick leave). Check both alongside California state law.