Non-Compete Agreements in California — Why They Are Almost Always Unenforceable

California is one of the most employee-protective states in the country on non-compete agreements — and by a wide margin. While many states enforce clauses restricting where employees may work after leaving a job, California takes the opposite position: with narrow exceptions, non-compete agreements are void and unenforceable as a matter of law. If your employer has asked you to sign a non-compete, or is threatening to enforce one, understanding California's strong protections is essential.

California's Near-Total Ban on Non-Compete Agreements

Under Business and Professions Code Section 16600 (full text)(Current as of 2026. Laws are subject to legislative change.), every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is void. California courts have consistently interpreted this statute broadly — voiding virtually all contractual restrictions on where an employee may work after leaving an employer.

This is not merely a rule of disfavor. California courts have held that Section 16600 reflects a fundamental public policy — the right of every person to pursue a lawful occupation of their choosing. That policy is enforced aggressively, and courts have declined to apply a "rule of reasonableness" that would allow narrowly tailored non-competes. If it restrains employment, it is void.

SB 699 — California Strengthened the Rule in 2024

Effective January 1, 2024, Senate Bill 699 added Business and Professions Code Section 16600.5, which makes it unlawful for an employer to enter into, maintain, or attempt to enforce a non-compete clause that is void under Section 16600 — regardless of where the contract was signed or where the employee worked. This directly targets the common tactic of using out-of-state law to enforce non-competes against California employees. Under SB 699, an employer who attempts to enforce a void non-compete is liable for actual damages, injunctive relief, and attorney's fees.

AB 1076 — Employers Must Notify Employees

Also effective January 1, 2024, Assembly Bill 1076 required employers to notify all current employees and former employees employed after January 1, 2022 that any non-compete clause in their contracts is void. This notification requirement put employers on formal notice of their obligations — and employees on notice of their rights.

The Three Narrow Exceptions

California law recognizes three narrow exceptions where non-compete agreements may be enforceable:

• Sale of a business — a seller of a business may be bound by a non-compete as part of the sale transaction under Business and Professions Code Section 16601
• Dissolution of a partnership — partners may agree not to compete following dissolution under Business and Professions Code Section 16602
• Dissolution of an LLC — members may agree not to compete following dissolution under Business and Professions Code Section 16602.5

None of these exceptions applies to ordinary employment relationships. A standard employment non-compete — even one framed as protecting trade secrets or signed as a condition of employment — does not qualify.

Out-of-State Non-Competes

Even if an employment contract was signed in another state, governed by another state's law, and the employee worked elsewhere before moving to California, a California employer cannot require a California employee to comply with a non-compete that would be void under California law. SB 699 reinforced this explicitly. Courts in other states have occasionally attempted to enjoin California employees from working for competitors, but California courts have consistently refused to enforce such injunctions and have recognized a California employee's right to work free from non-compete restrictions.

Non-Solicitation Agreements

Non-solicitation agreements — clauses prohibiting a departing employee from soliciting the employer's customers or employees — have been the subject of significant litigation. California courts have held that overbroad customer non-solicitation provisions are void under Section 16600 when they effectively prevent an employee from engaging in their profession. In AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923, the Court of Appeal held that a no-poach clause preventing a travel nurse from recruiting colleagues was void under Section 16600.

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

1. 1. Do not assume the non-compete is enforceableMost non-compete clauses in California employment contracts are void under Business and Professions Code Section 16600. Do not change your career plans based solely on a threatening letter.
2. 2. Preserve all communicationsKeep every email, letter, or message from your employer about the non-compete — including threats to enforce it.
3. 3. Do not sign any modifications or releasesIf your employer asks you to sign a new agreement or release, consult an attorney first.
4. 4. Consult a California employment attorney immediatelyAn employer who attempts to enforce a void non-compete may be liable for your attorney's fees and damages under SB 699.
5. 5. File a CRD complaint if retaliated againstIf your employer takes adverse action for refusing to comply with a void non-compete, that may constitute retaliation under California law.