Non-Compete Clauses in California: Are They Even Enforceable?

The short answer is no, not in most cases. California has one of the strongest bans on non-compete agreements in the entire country, and recent legislation has made that ban even more powerful. If you signed a non-compete clause as part of your employment contract, there is a good chance it is already void under California law.

Here is what you need to know.

What California Law Actually Says About Non-Competes

California Business and Professions Code Section 16600 declares that any contract restraining someone from engaging in a lawful profession, trade, or business is void, subject to narrow statutory exceptions. This law has been on the books since 1872, and California courts have interpreted it broadly and consistently in favor of employees.

The California Supreme Court made this position unmistakably clear in Edwards v. Arthur Andersen LLP (2008), where it held that non-compete clauses, no matter how narrowly tailored, are void and unenforceable unless they satisfy a specific statutory exception. Unlike most other states, California does not recognize a “reasonable restraint” exception. A non-compete clause does not become enforceable simply because it is limited in time, geography, or scope.

This matters for senior professionals in tech, finance, and healthcare who are often presented with employment contracts containing restrictive covenants as a standard part of onboarding. Signing one of these documents does not mean you are bound by it. If you are navigating a wrongful termination or considering leaving your employer, understanding the enforceability of your non-compete is a critical first step. Our post on wrongful termination in California covers what you should know before you make any decisions.

What Changed in 2024: SB 699 and AB 1076

California strengthened its non-compete ban significantly when two new laws took effect on January 1, 2024.

Senate Bill 699

SB 699 makes any non-compete agreement regardless of where it was signed, legally unenforceable in California. This means that even if you signed a non-compete in another state, under another state’s law, with a choice-of-law clause pointing to that state, your employer cannot enforce it against you in California.

SB 699 also provides that an employer who enters into or attempts to enforce a prohibited non-compete agreement commits a civil violation. Employees, former employees, and even prospective employees now have a private right of action to seek injunctive relief, actual damages, and attorney’s fees.

Assembly Bill 1076

AB 1076 expressly makes it unlawful for employers to include a non-compete clause in an employment contract and provides for Attorney General enforcement of the ban. It also required employers to notify current and former employees, those employed after January 1, 2022, in writing that any non-compete agreements they signed are void.

Together, these two laws transformed what was previously an unenforceable contract clause into a potential source of significant legal liability for employers who attempt to enforce one. If your employer has threatened you with a non-compete or sent a cease-and-desist letter based on one, that threat itself may now constitute a civil violation. This is especially relevant for employees in tech who may be facing AI-based performance tracking or other forms of employer pressure as they consider their next career move.

Are There Any Exceptions?

Yes, but they are narrow and specifically defined. California still recognizes limited exceptions where non-compete type restrictions may be valid, such as when a person sells the goodwill of a business, all of their ownership interest, or substantially all operating assets of an enterprise.

In plain terms, these exceptions apply in the context of a business sale, not ordinary employment. If you are a co-founder or owner selling your stake in a company, a non-compete tied to that transaction may be enforceable. If you are an employee who was simply asked to sign one as a condition of employment, no exception is likely to apply.

Employers can also use non-solicitation of customers or employees in some limited contexts, but these provisions must be carefully drafted so they do not function as de facto non-compete clauses. Courts in California look closely at whether a non-solicitation clause effectively restricts an employee’s ability to work in their profession, if it does, it is treated like a non-compete and is likely void.

If you are unsure whether an exception applies to your specific situation, speaking with a California employment attorney is the most reliable way to find out.

What Employers Can Still Legally Restrict

Even though non-competes are void, employers do retain some tools to protect their legitimate business interests. These include:

• Confidentiality and trade secret agreements — Employers can require employees to keep proprietary information confidential, provided the agreement does not effectively prevent the employee from working in their field. This intersects directly with what happens if you break an NDA, which is worth reading if you have signed one.
• Non-solicitation of specific clients — In limited circumstances, narrowly tailored client non-solicitation clauses may survive scrutiny, but only if they do not function as a backdoor non-compete.
• Intellectual property assignments — Employers can require employees to assign inventions and creative work developed in the course of employment.

The line between a lawful confidentiality agreement and an unlawful non-compete is not always obvious. If your contract contains language restricting what you can do, who you can work for, or which clients you can serve after leaving, it is worth having an attorney review it before you act.

What to Do If Your Employer Is Threatening to Enforce a Non-Compete

If your employer or former employer has sent you a warning letter, threatened litigation, or taken any action based on a non-compete clause, you have options and California law is firmly on your side.

Here are the steps to take:

• Do not assume the clause is enforceable. Most non-competes in California employment contracts are void by operation of law. A threatening letter does not change that.
• Save all written communications. Emails, letters, and any contact from your employer or their attorneys are important to preserve.
• Do not delay. Even though the clause may be void, your employer’s attempt to enforce it could cause real harm to your career and your new employer relationship. Acting quickly protects you.
• Consult an employment attorney. Under SB 699, you may have the right to sue your employer for attempting to enforce a void non-compete and recover attorney’s fees if you prevail.

If your employer’s actions feel retaliatory, for example, if the non-compete threat came after you reported misconduct or exercised a legal right that situation may also involve a whistleblower or retaliation claim. Our post on what makes a strong retaliation case in California is a good starting point to understand whether that applies to your situation. You may also want to review whether your departure involved discrimination or other unlawful conduct that could support additional claims.

Frequently Asked Questions

1. Are non-compete agreements enforceable in California?

In almost all employment situations, no. California Business and Professions Code Section 16600 voids any contract that restrains a person from engaging in a lawful profession, trade, or business. SB 699 and AB 1076, which took effect January 1, 2024, strengthened this ban further and gave employees the right to sue employers who attempt to enforce a void non-compete.

2. Can my employer enforce a non-compete if I signed it in another state?

No. Under SB 699, a non-compete agreement is unenforceable in California regardless of where it was signed or where employment was maintained. Even if your contract contains a choice-of-law clause selecting another state’s law, that clause cannot be used to enforce a non-compete against you in California.

3. What can my employer legally restrict me from doing in California?

Employers can lawfully require employees to protect trade secrets and confidential information, assign intellectual property developed during employment, and in some limited cases, refrain from soliciting specific clients. What they cannot do is broadly restrict your ability to work in your profession, industry, or geographic area after you leave. If you are unsure whether a specific clause crosses that line, speaking with an employment attorney can provide clarity.

4. Can I sue my employer for trying to enforce a non-compete in California?

Yes. Under SB 699, attempting to enforce a void non-compete is a civil violation. You may be entitled to injunctive relief, actual damages, and attorney’s fees. If the enforcement attempt was also retaliatory or discriminatory in nature, you may have additional claims worth exploring with an attorney.

Talk to a California Employment Attorney

If you have a non-compete clause in your employment agreement, or if your employer has threatened to enforce one, do not assume you are bound by it. California law is strongly on the side of employee mobility and open competition — and recent legislation has given employees real legal tools to push back.

At TONG LAW, Vincent Tong works with senior professionals and executives across Oakland, Sacramento, and the San Francisco Bay Area who are navigating employment transitions, contract disputes, and employer threats. With 15 years of experience in California employment law, TONG LAW can help you understand your rights and take action when an employer oversteps.

To discuss your situation, contact us for a case review or call (855) TONG-LAW. You can also submit a message through our contact form.

Information contained on this website is for general information only. Nothing on this website should be construed to be legal advice, and no attorney-client relationship has been formed.