Employment Law
In almost all cases, no. Business and Professions Code section 16600 makes every contract that restrains someone from a lawful profession, trade or business void, and since 2024 the law says this applies to employee noncompetes no matter how narrowly written or where they were signed. An employer that tries to enforce one can be sued by the employee.
Last updated October 4, 2026.
Many workers still sign noncompete clauses, especially when they are hired by a company based in another state or when the clause is buried in an offer letter, a bonus plan or a severance agreement. California's rule is simple and strict, and it has been strengthened in recent years. For an overview of employee rights, see our employment law page.
Section 16600(a) 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. Section 16600(b)(1), in effect since January 1, 2024, tells courts to read that rule broadly to void any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, unless an exception in the same chapter applies; section 16600(b)(2) says this declares existing law rather than changing it. Section 16600(c) adds that the rule is not limited to contracts the restrained person signed.
| Rule | Law |
|---|---|
| A noncompete clause in an employment contract is void unless a statutory exception applies | Bus. & Prof. Code 16600 |
| It is unlawful to include a noncompete clause in an employment contract or to require an employee to sign one | Bus. & Prof. Code 16600.1(a) |
| Employers had to notify current employees, and former employees employed after January 1, 2022, by February 14, 2024, that such a clause is void | Bus. & Prof. Code 16600.1(b) |
| A violation of section 16600.1 is an act of unfair competition | Bus. & Prof. Code 16600.1(c) |
| A void contract is unenforceable regardless of where and when it was signed | Bus. & Prof. Code 16600.5(a) |
| An employer may not try to enforce it, even if it was signed and the job was held outside California | Bus. & Prof. Code 16600.5(b) |
| An employee, former employee or job applicant can sue for an injunction and actual damages, and a prevailing employee recovers reasonable attorney fees and costs | Bus. & Prof. Code 16600.5(e) |
| An unfair competition claim must be brought within four years after it accrued | Bus. & Prof. Code 17208 |
Yes, but they concern owners, not ordinary employees. The chapter allows a noncompete within a specified geographic area in three situations:
| Situation | What may be agreed | Law |
|---|---|---|
| Selling a business | A person who sells the goodwill of a business, or an owner who sells all of their ownership interest, may agree with the buyer not to carry on a similar business in the area where the business operated, as long as the buyer carries on a like business there | Bus. & Prof. Code 16601 |
| Leaving a partnership | A partner may agree not to compete upon dissolution of the partnership or upon dissociation from it | Bus. & Prof. Code 16602 |
| Leaving an LLC | A member may make the same kind of agreement upon dissolution of the company or the end of the member's interest | Bus. & Prof. Code 16602.5 |
If you were simply hired as an employee, none of these applies. If you also held equity, how the exception works depends on what you sold and when, which is worth reviewing with a lawyer. Business owners negotiating a sale can read about that side of the transaction on our business law page.
Usually not for California workers. Labor Code section 925 says an employer cannot require an employee who primarily lives and works in California, as a condition of employment, to agree to resolve a California claim outside the state or to give up the protection of California law for a dispute that arose here. Such a provision is voidable by the employee, the dispute is then decided in California under California law, and the court may award attorney fees. The rule covers lawsuits and arbitration, and applies to contracts entered into, modified or extended on or after January 1, 2017. It does not apply if the employee was individually represented by a lawyer when negotiating the venue or choice of law term.
Section 16600.5 reaches the same result for noncompetes from the other direction: a void noncompete cannot be enforced against someone working in California regardless of where it was signed.
These are the facts that most often change how a restriction is analyzed.
The exceptions in sections 16601, 16602 and 16602.5 turn on selling a business or an ownership interest, or leaving a partnership or LLC. Section 16601 covers, among other things, selling all or substantially all of a company's operating assets together with its goodwill. A salary and a job title alone do not bring you within any of them.
California voids noncompetes, but it still protects genuine trade secrets. Under Civil Code section 3426.1(d), a trade secret is information that gets independent economic value from not being generally known and that is the subject of reasonable efforts to keep it secret. Misappropriation includes acquiring a trade secret by improper means, such as theft or breach of a duty to maintain secrecy, or using or disclosing one without consent (section 3426.1(a), (b)). A former employer's letter that talks about confidential information raises a different question from whether you may work for a competitor.
Section 16600(c) says the rule is not limited to contracts where the restrained person is a party. A restriction in an agreement between two businesses that keeps you from working in your field can be void as well.
Section 925 protects employees who primarily reside and work in California, for contracts entered into, modified or extended on or after January 1, 2017. Section 16600.5(b) separately bars an employer from trying to enforce a void noncompete even if the contract was signed and the job was held outside California.
A demand that you sign an unlawful clause or lose the job raises its own issues. If you were fired after refusing, our page on wrongful termination in violation of public policy explains how California treats firings for refusing to break the law.
For example, imagine a hypothetical sales representative who lives in Glendale and works remotely for a software company based in another state. Her 2023 offer letter includes a one-year noncompete and says the other state's law governs. In 2026 she accepts a job with a competitor. A week later her former employer's lawyer sends a letter demanding that she resign from the new job or be sued.
Several rules apply. Under section 16600.5(a) and (b), the noncompete is unenforceable regardless of where it was signed, and her former employer may not attempt to enforce it. Because she primarily lives and works in California and was not individually represented when she signed, section 925 lets her void the choice-of-law clause. The demand itself may be a civil violation under section 16600.5(d), and section 16600.5(e) would let her sue for an injunction and damages, with attorney fees if she prevails. The letter also mentions "confidential customer information," which is a separate question under the trade secret law.
She keeps the letter and her offer letter, confirms she took no company files, and gets advice before responding. None of this tells her how a dispute would end; it tells her which rules apply and what to preserve.
Requiring it is unlawful. Section 16600.1(a) bars requiring an employee to enter a noncompete agreement that does not fit an exception, and section 16600.5(e) lets a prospective employee sue for an injunction or damages.
For current employees, and former employees employed after January 1, 2022, yes: section 16600.1(b) required a written individualized notice by February 14, 2024. A missing notice does not make the clause valid.
Section 16600(a) voids every contract by which anyone is restrained from a lawful profession, trade or business, so it is not limited to employees. The 2024 notice and employment-contract rules in section 16600.1 are written for employees.
Yes. The noncompete ban does not authorize misappropriation of trade secrets, which Civil Code section 3426.1 defines to include acquiring them by improper means or using them without consent in certain circumstances.
An unfair competition claim, which section 16600.1(c) makes available for a violation of that section, must be brought within four years after it accrued (section 17208). Our table of employment claim deadlines in California lists other limits.
A prevailing employee, former employee or applicant is entitled to reasonable attorney fees and costs under section 16600.5(e)(2). Our page on who pays the lawyer in a California employment case explains fee rules for other claims.
We review noncompete, choice-of-law and severance terms for employees in Glendale and across Los Angeles County, explain whether California law voids them, and help respond when a former employer threatens action. Our article on recent changes in California law puts the 2024 noncompete rules in context. Our page for workers in Los Angeles County explains which courthouse hears an employment lawsuit here. Call (818) 244-9000 or request a consultation.
Our Glendale team can review the agreement and explain whether California law lets your employer enforce it.
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