Non-Compete Agreement in California
State-specific overview · Employment Law
California generally voids non-compete agreements as unlawful restraints on trade, with narrow exceptions for sale of business and partnership dissolution.
How California treats Non-Compete Agreement
California Business and Professions Code § 16600 prohibits agreements that restrain individuals from engaging in lawful professions, trades, or businesses. Non-compete agreements are presumptively void and unenforceable, even if reasonable in scope and duration. The statute recognizes only limited exceptions: agreements ancillary to the sale of a business or dissolution of a partnership may be enforceable if they meet strict requirements. California courts interpret § 16600 broadly to protect employee mobility and competition, making non-competes one of the most disfavored contract types in the state.
The general definition of Non-Compete Agreement
A contract clause restricting an employee from working for competitors or starting a competing business after leaving.
A non-compete agreement is a contract between an employer and employee that prevents the employee from working for a competitor or starting a competing business for a set period after leaving the job. These agreements are designed to protect the employer's trade secrets and customer relationships. However, courts scrutinize them carefully because they restrict a person's right to earn a living. A non-compete is generally enforceable only if it is reasonable in scope (limited to a specific geographic area and time period) and protects a legitimate business interest. Some states, like California, disfavor non-competes entirely.
Read the full Non-Compete Agreement entry →This page is a plain-English reference and is not legal advice. State laws change frequently. For specific situations consult a licensed attorney in California.