In California, non-compete agreements are generally unenforceable under Business and Professions Code Section 16600, except in very limited situations.
Business and Professions Code Section 16600 states: "Except as provided in this chapter, 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 restricts an employee from working for a competitor after leaving an employer is generally not enforceable in California.
The only exception to this rule is for certain limited situations such as the sale of a business, where part of the sale includes goodwill of the business. In this case, a non-compete agreement may be enforceable if it is necessary to protect the buyer’s investment in the purchase of the goodwill.
Additionally, California courts have held that non-solicitation agreements, which prohibit an employee from soliciting the employer's customers or employees, are only enforceable to the extent that they are narrowly tailored to protect the employer’s trade secrets or confidential information.
If an employer attempts to enforce a non-compete agreement contrary to California law, the employee may be entitled to damages, attorney fees, and injunctive relief.
Therefore, if an employer asks an employee to sign a non-compete agreement in California outside of the limited exceptions mentioned above, the employee should consult with an attorney to understand their rights and options.
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