California non-compete law

Pay figure in the law

None found in the statutes we read

Separate rules for professions

None found in the statutes we read

Statutes and official texts quoted

Cal. Bus. & Prof. Code § 16600(a); Cal. Bus. & Prof. Code § 16600(b)(1); Cal. Bus. & Prof. Code § 16600.1(a); Cal. Bus. & Prof. Code § 16600.1(b)(1); Cal. Bus. & Prof. Code § 16600.5(a); Cal. Bus. & Prof. Code § 16600.5(b); Cal. Bus. & Prof. Code § 16600.5(e)(1); Cal. Bus. & Prof. Code § 16600.5(e)(2); Cal. Bus. & Prof. Code § 16600.5 (history note); Cal. Lab. Code § 925(a); Cal. Lab. Code § 925(e); Cal. Bus. & Prof. Code § 16601

Is a non-compete allowed?

California law voids contracts that restrain anyone from engaging in a lawful profession, trade, or business, except as provided in the chapter.

“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.”
Cal. Bus. & Prof. Code § 16600(a)

The statute is to be read broadly to void any noncompete in an employment context, no matter how narrowly tailored, unless it fits a statutory exception.

“This section shall be read broadly, in accordance with Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception in this chapter.”
Cal. Bus. & Prof. Code § 16600(b)(1)

It is unlawful for an employer to include a noncompete clause in an employment contract, or require an employee to sign one, unless it fits a statutory exception.

“It shall be unlawful to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy an exception in this chapter.”
Cal. Bus. & Prof. Code § 16600.1(a)

Notice and signing

Employers had to notify current employees, and former employees employed after January 1, 2022, by February 14, 2024 that a void noncompete clause or agreement is void.

“For current employees, and for former employees who were employed after January 1, 2022, whose contracts include a noncompete clause, or who were required to enter a noncompete agreement, that does not satisfy an exception to this chapter, the employer shall, by February 14, 2024, notify the employee that the noncompete clause or noncompete agreement is void.”
Cal. Bus. & Prof. Code § 16600.1(b)(1)

Exceptions

The Labor Code § 925 restriction does not apply where the employee was individually represented by counsel in negotiating the venue, forum, or choice-of-law terms.

“This section shall not apply to a contract with an employee who is in fact individually represented by legal counsel in negotiating the terms of an agreement to designate either the venue or forum in which a controversy arising from the employment contract may be adjudicated or the choice of law to be applied.”
Cal. Lab. Code § 925(e)

A person selling the goodwill of a business, or an owner disposing of all their ownership interest, may agree with the buyer to refrain from carrying on a similar business within a specified area.

“Any person who sells the goodwill of a business, or any owner of a business entity selling or otherwise disposing of all of his or her ownership interest in the business entity,”
Cal. Bus. & Prof. Code § 16601

If it is challenged

An employer may not attempt to enforce a contract void under the chapter even if it was signed and the employment was maintained outside California.

“An employer or former employer shall not attempt to enforce a contract that is void under this chapter regardless of whether the contract was signed and the employment was maintained outside of California.”
Cal. Bus. & Prof. Code § 16600.5(b)

An employee, former employee, or prospective employee may sue for injunctive relief, actual damages, or both.

“An employee, former employee, or prospective employee may bring a private action to enforce this chapter for injunctive relief or the recovery of actual damages, or both.”
Cal. Bus. & Prof. Code § 16600.5(e)(1)

A prevailing employee, former employee, or prospective employee is entitled to reasonable attorney's fees and costs.

“a prevailing employee, former employee, or prospective employee in an action based on a violation of this chapter shall be entitled to recover reasonable attorney’s fees and costs.”
Cal. Bus. & Prof. Code § 16600.5(e)(2)

Which state’s law and court

A contract void under the chapter is unenforceable regardless of where and when it was signed.

“Any contract that is void under this chapter is unenforceable regardless of where and when the contract was signed.”
Cal. Bus. & Prof. Code § 16600.5(a)

An employer may not require an employee who primarily resides and works in California, as a condition of employment, to adjudicate a California claim outside California or give up California law protections for a California controversy.

“An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following: (1) Require the employee to adjudicate outside of California a claim arising in California. (2) Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.”
Cal. Lab. Code § 925(a)

When the rules took effect

Section 16600.5 was added by SB 699 (Stats. 2023, Ch. 157), effective January 1, 2024.

“(Added by Stats. 2023, Ch. 157, Sec. 2. (SB 699) Effective January 1, 2024.)”
Cal. Bus. & Prof. Code § 16600.5 (history note)

Federal rules

On September 5, 2025, the FTC moved to dismiss its appeals in Ryan, LLC v. FTC and Properties of the Villages v. FTC and to accede to vacatur of the Non-Compete Clause Rule. FTC press release, Sept. 5, 2025

The FTC's final rule removes the Non-Compete Rule (16 CFR part 910) from the Code of Federal Regulations. 91 Fed. Reg. (Feb. 12, 2026), FR Doc. 2026-02866

Before you sign, or before you assume you are bound

1. Find every restrictive clause: non-compete, non-solicitation, no-hire and confidentiality are separate promises with separate rules.
2. Note how long each lasts and what area or customers it covers.
3. Check which state’s law the agreement picks and where disputes must be heard.
4. Compare your pay and your job with the California rules above.

Check your state with the non-compete checker.

Common questions

Are non-competes enforceable in California?

California law voids contracts that restrain anyone from engaging in a lawful profession, trade, or business, except as provided in the chapter. (Cal. Bus. & Prof. Code § 16600(a)).