Are non-compete agreements enforceable in California?
1. Baseline Rule. California is the strictest no-non-compete state in the country. Cal. Bus. & Prof. Code § 16600 provides 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." The California Supreme Court in Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008), rejected any "narrow restraint" exception, voiding even modestly drawn covenants.
2. Reasonableness Factors. None apply. California courts do not engage in a reasonableness inquiry for employee non-competes — the statutory void is categorical. The only recognized exceptions are tied to sale of business goodwill (§ 16601), dissolution of partnership (§ 16602), and dissolution of LLC (§ 16602.5).
3. Consideration. Irrelevant — no amount of consideration can save a non-compete.
4. Wage Thresholds. Not applicable; the prohibition covers all workers regardless of pay.
5. Blue Pencil / Reformation. California courts will not rewrite or narrow an overbroad covenant; they void it.
6. Industry Carve-Outs. Trade-secret protection remains available under CUTSA (Civ. Code § 3426 et seq.). True customer non-solicits tied to trade-secret misuse may survive, but standalone customer non-solicits are also void after AMN Healthcare v. Aya Healthcare, 28 Cal. App. 5th 923 (2018).
7. FTC Rule. The FTC's April 2024 ban (16 C.F.R. § 910) was enjoined nationwide in Ryan LLC v. FTC (E.D. Tex. Aug. 20, 2024); on appeal to the Fifth Circuit. California law remains the operative ban.
8. Garden Leave / Forfeiture-for-Competition. Forfeiture clauses (e.g., losing unvested equity for competing) are also treated as restraints and likely void.
9. Choice of Law. Bus. & Prof. Code § 16600.5 (SB 699, 2024) voids any contract that purports to enforce a non-compete against a California-based worker regardless of where signed, and bars choice-of-law and forum-selection clauses circumventing § 16600. AB 1076 required employers to send written notice by February 14, 2024, to current and former employees (post-2022) whose contracts contained void non-competes.
This is legal information, not legal advice.
- Out-of-state employer threatens to sue you in another state for violating a non-compete
- Employer demands you sign a non-compete as a condition of California employment
- You did not receive the AB 1076 notice voiding your prior non-compete
- Cal. Bus. & Prof. Code § 16600
- Cal. Bus. & Prof. Code § 16600.5 (SB 699, 2024)
- AB 1076 (2024)
- Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008)
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.