Are Non Competes Enforceable in California?
Legally reviewed by: Jessica Anvar Stotz, JD, MBA
Short answer: No, non-compete agreements are generally not enforceable in California, except in limited circumstances such as the sale of a business or dissolution of a partnership.
California has a strong public policy favoring employee mobility and competition. Section 16600 of the California Business and Professions Code 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.”
This means that any agreement that attempts to restrict an employee from working for a competitor or starting a competing business is generally unenforceable in California.
Legal Definition of Non Competes in California
In California, non-compete agreements are generally void and unenforceable under Business and Professions Code Section 16600. This legal provision states that any contract or agreement that restricts an individual from engaging in a lawful profession, trade, or business is against public policy and is therefore invalid.
As a result, California maintains a pro-employee stance, allowing workers the freedom to pursue job opportunities and utilize their skills and knowledge without undue restrictions imposed by non-compete clauses. Certain exceptions do exist, however, such as agreements related to the sale of a business or protection of trade secrets.
What are the Exceptions to the Non-Compete Law in California?
Below are some common exceptions to non-compete agreements in California:
- Sale of Business: Non-compete agreements may be enforceable when they are part of the sale or purchase of a business, where the buyer has a legitimate interest in preventing the seller from competing in the same industry within a specific geographic area and time period.
- Dissolution of Partnership: Non-compete agreements may be enforceable when partners dissolve a partnership and agree not to compete with each other in the same business or industry.
- Trade Secrets: While not a strict exception to non-compete agreements, California law allows employers to protect their trade secrets, proprietary information, and intellectual property through other means such as non-disclosure agreements and confidentiality agreements.
- Executives and Key Employees: In some cases, non-compete agreements may be enforceable for high-level executives or key employees who possess specialized skills or access to sensitive company information.
- Non-Solicitation Agreements: Non-solicitation agreements, which prohibit employees from soliciting the company’s customers or employees, may be enforceable if they are narrowly tailored and reasonable in scope.
This list is not exhaustive, note that the specific circumstances and enforceability of non-compete agreements can vary. This list is not exhaustive.
Can a California Employer Fire Someone for Not Signing a Non Compete?
In California, it is against the law for employers to terminate employees solely because they refuse to sign non-compete agreements, and such actions can be considered wrongful termination. If an employer wrongfully terminates an employee, the affected individual has the option to pursue legal remedies.
It is worth noting, however, that determining whether an agreement qualifies as a non-compete, even if labeled as such, can sometimes be challenging.
What Can Be Done if I Already Signed a Non Compete?
Non-compete agreements in California are generally considered null and void by courts, rendering them unenforceable. If you have already signed a non-compete agreement in California, know that such agreements are typically unenforceable.
As per Business and Professions Code Section 16600, courts in California have consistently held that these contracts go against public policy by restricting an individual’s right to pursue their chosen profession or trade.
Frequently Asked Questions
When did California ban noncompetes?
California effectively banned non-compete agreements in 1872 with the enactment of Business and Professions Code Section 16600. This law prohibits contracts that restrain individuals from engaging in lawful professions, trades, or businesses, making non-compete agreements unenforceable and against public policy in the state.
Can I work for a competitor if I signed a non-compete California?
Yes, you can work for a competitor even if you signed a non-compete agreement in California. Non-compete agreements are generally considered void and unenforceable in the state under Business and Professions Code Section 16600.
This means that California law prohibits employers from restraining employees from engaging in a lawful profession, trade, or business, including working for a competitor. Therefore, you are not legally bound by the non-compete agreement, and you are free to pursue job opportunities with competitors or in any other field without fear of legal repercussions.
Can an out of state non-compete be enforced in California?
No, out-of-state non-compete agreements cannot be enforced in California. California law, specifically Business and Professions Code Section 16600, deems non-compete agreements void and unenforceable, regardless of where the agreement was made. Therefore, California courts will not uphold such agreements even if they are signed in another state.
Get in Touch with a Lawyer
If you have legal questions or concerns about a noncompete agreement, we recommend consulting with a qualified lawyer. An employment attorney can provide expert advice, review your specific situation, and guide you through the legal process. They can also help you protect your rights and navigate any legal issues you may be facing.
Need assistance finding an attorney in California? LawLinq can help, we are an attorney referral service connecting clients with exceptional legal representation throughout the state. Our team is more than happy to help you find the right lawyer for your specific legal needs, at no cost. To get in touch with us visit our website or call us at (855) 997-2558.
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