California Non-Competes
Non-compete clauses in employment contracts may make you hesitate, as they dictate where you can’t work after your current job ends.
These legal provisions, known as non-compete agreements, seek to limit your ability to work for competitors or start a similar business for a specific period and within a certain geographic area after employment.
While these clauses create a perceived boundary around your future career, California law presents a different legal framework. If you’re facing a non-compete in California, this MJB Law Group guide offers insights into potential legal solutions.
Non-Compete Agreements
What Are Non-Compete Clauses?
A non-compete clause is a provision in a contract where an employee agrees not to enter into competition with the employer after the employment period is over. It often limits time, geography, and industry involvement.
Why Employers Use Them
Employers often implement non-competes to:
- Protect trade secrets
- Retain clients
- Reduce turnover
- Prevent competitors from poaching trained talent
Sounds fair, right? In theory, yes… but in practice, especially in California, it’s a different story.
Why Employees Should Care
Imagine leaving a job only to be told you can’t work in your field for a year — or in your city! That’s the kind of restrictive clause that might appear in a non-compete agreement. And unless you know your rights, you might think you’re legally bound to it.
Non-Competes in California
Let’s get straight to the point: non-competes in California are generally unenforceable. Why? Because California believes in mobility, innovation, and freedom of employment. It’s not just a moral stance — it’s the law.
California’s Unique Stance on Non-Competes
California Business and Professions Code §16600
This code explicitly states:
“Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
In simpler terms — no, you can’t block someone from working.
The Policy Favoring Worker Mobility
The Golden State thrives on talent fluidity. Restricting workers limits innovation, especially in fast-paced sectors like tech, media, and healthcare.
Public Interest and Innovation in the State
California’s booming economy is often credited to its anti-non-compete philosophy — fostering healthy competition and letting professionals move freely between opportunities.
Historical Context
Origins of Non-Compete Law in California
Dating back to the 1800s, California’s legislature recognized the harmful effects of non-compete clauses and embedded worker-friendly rules in its business laws.
Landmark Legal Cases
One key case — Edwards v. Arthur Andersen LLP (2008) — cemented the state’s hardline stance: non-competes are void, period.
Federal vs. California Perspectives
While other states may allow conditional enforcement, California stands firm. Even federal movements toward non-compete limitations don’t quite match California’s zero-tolerance policy.
Are Non-Compete Agreements Enforceable in California?
General Rule: They’re Void
It’s not a gray area — it’s black and white. Unless a rare exception applies, non-compete clauses are invalid in California.
Key Exceptions to the Rule
There are three major exceptions:
Sale of Business Exception
When selling a business, the seller may agree not to compete with the buyer within a reasonable scope.
Dissolution of Partnership Exception
If a partnership dissolves, former partners can agree not to compete with the partnership’s continued operations.
LLC Dissolution Exception
Similarly, members of a dissolved LLC can agree to limitations post-dissolution — but again, within reason.
Employee Rights and Protections
You Can’t Be Forced to Sign One
If you’re handed a non-compete to sign in California… walk away. You’re not legally obligated to agree — and employers know it.
Your Job Can’t Be Conditioned on It
Employers can’t dangle your employment like a carrot and force a signature. If they do, they’re already on shaky legal ground.
What to Do If You’re Threatened with Enforcement
Take action:
- Don’t panic
- Don’t quit
- Contact a legal expert immediately
Employer Responsibilities
Drafting Employment Contracts Without Non-Competes
Instead of non-competes, California employers are encouraged to:
- Use NDAs
- Protect intellectual property
- Outline clear termination procedures
Using Other Lawful Protections (e.g., NDAs, IP clauses)
NDAs and confidentiality agreements are 100% legal and enforceable when drafted correctly — and far less controversial.
Risks of Including Unenforceable Clauses
If you add a non-compete anyway?
- Legal fees
- Employee backlash
- Damage to your reputation
Recent Legislative Updates
SB 699 – Expanding Worker Protections (Effective 2024)
This law prohibits employers from attempting to enforce non-competes — even if signed out-of-state.
AB 1076 – Mandatory Notification to Employees
As of 2024, employers must notify employees in writing if they signed a non-compete that’s void under California law.
Penalties for Violating the Law
Violations come with:
- Civil penalties
- Legal damages
- Potential class action exposure
Alternatives Employers Use in California
Non-Disclosure Agreements (NDAs)
Protect sensitive business info without restricting career mobility.
Non-Solicitation Clauses
These limit former employees from poaching clients or coworkers — still enforceable in narrow, lawful scopes.
Confidentiality and IP Ownership Provisions
Clearly define what belongs to the company — code, designs, strategies — and secure your competitive edge lawfully.
Litigation Around Non-Competes
How Courts Treat Out-of-State Agreements
California courts routinely invalidate agreements even if signed elsewhere.
Jurisdiction Battles in Multistate Employment
It gets tricky when companies try to use forum-selection clauses to push cases into more employer-friendly states.
Employer Liability for Unlawful Restrictions
Employers can be sued for attempting to enforce void clauses.
Out-of-State Employers and California Employees
Can an Employer Enforce a Non-Compete Signed Elsewhere?
Short answer: no, not if the employee works in California.
What Happens When You Move to California?
You’re protected. Moving to California can void your prior non-compete.
Forum-Selection and Choice-of-Law Clauses
These clauses often get tossed by California courts — protecting employee rights above all.
Tech Industry and Non-Competes
Why Silicon Valley Opposes Them
Innovation thrives on freedom. Tech hubs like Silicon Valley oppose non-competes because they stifle creativity and movement.
Case Studies of Innovation and Mobility
Think of how many startups spun off from Google, Apple, or Facebook — that’s possible thanks to California’s open job market.
Lessons for Other States
Many other states are starting to follow suit… but California paved the way.
Independent Contractors and Freelancers
Does the Law Apply to Contractors?
Yes — non-compete clauses for contractors are usually void under §16600 too.
What to Watch for in Client Agreements
Freelancers should carefully scan for any “competition restrictions” masquerading as NDAs or exclusivity clauses.
How to Respond to a Non-Compete Threat
Steps Employees Can Take
- Don’t sign under pressure
- Keep documentation
- Know your rights
Seeking Legal Counsel
You’ll want an attorney from MJB Law Group who knows the nuances of non-competes in California — someone who lives and breathes employment law.
How to Negotiate Before Signing Anything
Before you sign, try:
- Replacing it with a confidentiality clause
- Clarifying scope and duration
- Consulting legal experts at MJB Law Group
Drafting Contracts Without Violating §16600
How Employers Can Stay Compliant
Avoid using prohibited language altogether. Consult with legal professionals who understand California’s nuances.
Avoiding Costly Legal Challenges
The fewer gray areas, the better. Clear, lawful contracts reduce risk for everyone involved.
Promoting Worker Rights with MJB Law Group
When it comes to fighting illegal non-competes, MJB Law Group stands tall. As a California employment and injury law firm, MJB specializes in protecting workers who’ve been wronged.
Whether you’re facing an employment issue such as wrongful termination or a non-compete threat, MJB Law Group is here to level the playing field and fight for your justice. Contact us.
Conclusion
California doesn’t just discourage non-compete agreements — it outright bans them in most cases. That’s not just good news for employees — it’s a bold statement about innovation, freedom, and fairness.
Whether you’re negotiating a job offer, planning to switch employers, or reviewing a contract, remember: con-competes in California are usually void. Know your rights, and don’t be afraid to stand your ground.
And if you need help? MJB Law Group is ready to fight for you.
