🔓 Noncompete, Nonsolicit & NDA Challenge Letters
Challenge overbroad restrictive covenants in employment contracts
California's Strong Public Policy Against Noncompetes

California Business & Professions Code § 16600 states: "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 is one of the strongest anti-noncompete laws in the nation. With very narrow exceptions, noncompete agreements are unenforceable in California—even if:

  • You signed the agreement voluntarily
  • The agreement specifies another state's law (California courts will still apply § 16600)
  • You received consideration (e.g., a signing bonus or promotion)
  • The restriction is geographically or temporally limited
✅ Recent Developments: On January 1, 2024, California SB 699 went into effect, making it illegal for employers to even enter into noncompete agreements (previously, they were just unenforceable). Employers who violate this face civil penalties. Additionally, the FTC proposed a nationwide ban on noncompetes in 2023 (still pending as of 2025).
Narrow Exceptions to § 16600

California recognizes only three statutory exceptions where noncompetes may be enforceable:

Exception Statute Requirements
Sale of business goodwill § 16601 Seller of a business or owner selling ownership interest; must receive substantial consideration for the business/interest
Partnership dissolution § 16602 Partners dissolving a partnership or dissociating from an ongoing partnership
LLC member dissociation § 16602.5 Members dissociating from a limited liability company

Key point: These exceptions apply only to owners, not regular employees. If you're a W-2 employee (not an equity-holding partner or business seller), § 16600 voids your noncompete.

Nonsolicitation and Customer Noninterference Agreements

California courts are more tolerant of narrow nonsolicitation agreements, but they must be carefully limited:

Type Enforceability in CA
Customer nonsolicitation Generally unenforceable under § 16600 (restrains employee's ability to work)
Employee nonsolicit (anti-poaching) Narrowly enforceable if limited to active solicitation (not merely hiring former colleagues who apply voluntarily)
Trade secret / confidential info restrictions Enforceable under California Uniform Trade Secrets Act (CUTSA) and common law, but cannot be disguised noncompetes
🔍 Edwards v. Arthur Andersen (2008): California Supreme Court held that § 16600 applies broadly to any restraint on competition, not just traditional noncompetes. Even "narrow" restraints (e.g., 6-month customer nonsolicits) are void unless they fit within a statutory exception or protect trade secrets without restraining competition.
Nondisclosure Agreements (NDAs)

NDAs are generally enforceable in California, but only if they:

  • Protect actual trade secrets (as defined by CUTSA: information with independent economic value that's subject to reasonable secrecy efforts)
  • Do not function as a disguised noncompete (e.g., defining "confidential information" so broadly that the employee cannot work in the industry)
  • Do not violate SB 331 (prohibits NDAs that prevent disclosure of workplace harassment, discrimination, or sexual assault)
⚠️ SB 331 (Effective Jan 1, 2022): California law now prohibits NDAs in settlement agreements or severance packages that prevent employees from disclosing information about harassment, discrimination, or assault. Employers who violate this face civil penalties and the NDA provision is void.
Federal FTC Noncompete Ban (Pending)

In January 2023, the FTC proposed a nationwide rule banning noncompete clauses for all workers (employees and independent contractors). Key provisions of the proposed rule:

  • Employers could not enter into, enforce, or even represent that workers are subject to noncompetes
  • Existing noncompetes would be rescinded
  • Trade secret protections and customer nonsolicits might still be allowed if narrowly tailored
  • Employers would be required to notify workers that their noncompetes are void

Status: As of 2025, the rule is still subject to legal challenges and has not yet taken effect. However, it signals strong federal policy against noncompetes.

Step 1: Identify the Type of Restriction

Review your employment agreement, offer letter, or separation agreement and identify all restrictive covenants:

Type What It Restricts Example Language
Noncompete Working for a competitor or starting a competing business "Employee shall not work for any competitor within 50 miles for 2 years after termination"
Customer nonsolicit Soliciting or servicing the employer's customers "Employee shall not solicit or service any customer of Company for 1 year"
Employee nonsolicit Recruiting or hiring former colleagues "Employee shall not solicit any employee of Company to leave employment"
Nondisclosure (NDA) Disclosing confidential information or trade secrets "Employee shall not disclose Confidential Information, including customer lists, pricing, and processes"
Invention assignment Claiming ownership of inventions/IP created during employment "All inventions made during employment belong to Company"
Step 2: Assess Enforceability Under California Law

Use this flowchart to determine if your restriction is likely enforceable:

  1. Is it a noncompete?
    • ✅ If you're in California and not an owner/partner selling a business: VOID under § 16600
    • ⚠️ If the agreement specifies another state's law, California courts will still apply § 16600 for CA residents/workers
  2. Is it a customer nonsolicit?
    • ❌ Likely unenforceable under Edwards if it materially restrains your ability to work
    • ✅ Possibly enforceable if extremely narrow and tied to trade secret protection
  3. Is it an employee nonsolicit?
    • Narrowly enforceable if limited to active poaching (not merely hiring former colleagues who apply on their own)
  4. Is it an NDA?
    • Enforceable if it protects actual trade secrets and doesn't function as a noncompete
    • Void if it prohibits disclosure of harassment, discrimination, or assault (SB 331)
    • Overbroad if it defines "confidential" to include general industry knowledge or skills
🔍 Choice of Law Clauses Don't Work: Many employers include clauses like "This agreement shall be governed by New York law." California courts will ignore these clauses and apply § 16600 if the employee lives/works in California or the employer conducts business here. Application Group, Inc. v. Hunter Group, Inc. (1998).
Step 3: Identify Overbroad Provisions

Even if a restriction could be enforceable in theory, it may be void if overbroad:

Red Flag Why It's Problematic
Definition of "competitor" is vague or overly broad Covers entire industry or unrelated business lines
Geographic scope too wide "Nationwide" or "worldwide" restrictions for local business
Duration too long Restrictions lasting more than 1–2 years (even in states that allow noncompetes)
"Confidential information" defined to include general knowledge NDA covers skills, experience, or industry knowledge not protectable as trade secrets
No consideration provided Agreement imposed after employment started with no raise, promotion, or other benefit
Prohibits disclosure of illegal conduct NDA prevents reporting harassment, discrimination, wage violations, or other illegal acts
Step 4: Determine Your Leverage

Assess your negotiating position:

  • Strong leverage (employer unlikely to enforce):
    • You're in California and the restriction is a noncompete or customer nonsolicit
    • The agreement is overbroad or vague
    • You didn't receive meaningful consideration
    • The employer has a history of not enforcing these clauses
  • Moderate leverage (uncertain enforceability):
    • Employee nonsolicit (narrow scope might be enforceable)
    • NDA that includes some trade secrets but also general knowledge
    • You're moving to a role that arguably doesn't compete
  • Weak leverage (likely enforceable):
    • NDA covering clear, specific trade secrets (formulas, customer data, proprietary processes)
    • You actually plan to use or disclose trade secrets
    • You're an owner/partner subject to a § 16601/16602 exception
When to Send a Challenge Letter

Consider sending a pre-emptive challenge letter if:

  • You're planning to leave for a new job and want to clear the air before starting
  • The employer has threatened to enforce the restriction
  • You want to force the employer to commit to non-enforcement in writing
  • You're seeking a declaratory judgment that the restriction is void and want to show good faith
⚠️ Strategic Risk: Sending a challenge letter may provoke the employer to file a preemptive lawsuit or TRO. Consult an attorney before sending if you're concerned about immediate injunctive relief. In some cases, it's better to start the new job and let the employer decide whether to sue.
Structure of a Noncompete Challenge Letter
  1. Identify the agreement: Reference the specific contract and restrictive covenant provision
  2. State your position: Clearly state you believe the restriction is unenforceable and why
  3. Legal basis: Cite California Bus. & Prof. Code § 16600, Edwards, SB 699, and any other applicable law
  4. Factual support: Explain why you don't fit the narrow exceptions (you're not an owner, not selling a business, etc.)
  5. Overbreadth arguments: Point out vague terms, excessive scope, lack of consideration
  6. Request for confirmation: Ask employer to confirm in writing they will not enforce the restriction
  7. Consequence of enforcement: Warn that you will seek declaratory relief, attorneys' fees, and potentially damages under SB 699
Sample Noncompete Challenge Letter (California Employee)

[Your Name]
[Your Address]
[City, State, ZIP]
[Email]
[Phone]

[Date]

[Former Employer Name]
Attn: General Counsel / HR Director
[Company Address]
[City, State, ZIP]

Re: Noncompete Agreement – Notice of Unenforceability Under California Law

Dear [Employer]:

I am writing regarding the noncompetition provision in the [Employment Agreement / Offer Letter / Separation Agreement] I signed on [date] (the "Agreement"). Specifically, Section [X] of the Agreement purports to prohibit me from working for a competitor or soliciting customers of [Company] for [X years/months] following the termination of my employment.

I am writing to inform you that this provision is void and unenforceable under California law, and I will not be bound by it.

Legal Basis:

California Business & Professions Code § 16600 provides: "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." The California Supreme Court has made clear that § 16600 applies broadly to any restraint on an employee's ability to compete, regardless of geographic or temporal limitations. Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008).

The noncompete provision in our Agreement does not fall within any of the narrow statutory exceptions (§§ 16601, 16602, 16602.5), which apply only to owners selling a business or partners dissolving a partnership. I was a [W-2 employee / salaried employee] with no ownership interest in [Company], and I did not sell any business interest or goodwill. Therefore, § 16600 voids the noncompete in its entirety.

Moreover, California Senate Bill 699, effective January 1, 2024, makes it unlawful for employers to enter into or attempt to enforce noncompete agreements with employees. Employers who violate SB 699 face civil penalties and may be required to notify affected employees that the agreements are void.

Request for Confirmation:

I respectfully request that you confirm in writing, within 10 business days, that [Company] will not enforce or attempt to enforce the noncompete provision in the Agreement, and that I am free to accept employment with any employer of my choosing without restriction.

If I do not receive such confirmation, or if [Company] threatens to enforce the noncompete, I will have no choice but to seek declaratory relief in court. Under California law, I would be entitled to recover my attorneys' fees and costs if I prevail. Additionally, any attempt to enforce this void provision may subject [Company] to penalties under SB 699.

I remain willing to honor any valid obligations under the Agreement, including the nondisclosure of legitimate trade secrets. However, the noncompete provision is not among them.

Please direct all communications to me at [email] or [phone].

Sincerely,

[Your Signature]
[Your Printed Name]

Sample NDA Overbreadth Challenge

Re: Overbroad Nondisclosure Agreement – Request for Clarification

Dear [Employer]:

I am writing regarding the Nondisclosure Agreement I signed on [date]. While I acknowledge my obligation to protect [Company]'s legitimate trade secrets, I believe certain provisions of the NDA are overbroad and unenforceable under California law.

Specifically, the NDA defines "Confidential Information" to include "[broad definition, e.g., 'any information related to the business']." This definition sweeps in general industry knowledge, skills, and experience that I have acquired over the course of my career and that are not protectable trade secrets under the California Uniform Trade Secrets Act (CUTSA).

Under California law, an NDA cannot function as a disguised noncompete by prohibiting an employee from using general knowledge or skills in their profession. Edwards v. Arthur Andersen. To the extent the NDA purports to restrict me from working in [industry] or using skills I have developed, it is void under § 16600.

I request that [Company] clarify in writing which specific information it considers "trade secrets" subject to the NDA, so that I can ensure compliance while exercising my right to pursue my livelihood. I am happy to protect bona fide trade secrets, such as [specific examples: proprietary formulas, customer data not publicly available, etc.], but I will not be restricted from using general industry knowledge or skills.

Please respond within 10 business days. If [Company] takes the position that the NDA restricts me from working in [industry] or using general knowledge, I will seek declaratory relief.

Sincerely,
[Your Name]

💡 Tone: Keep the letter professional and factual, not combative. You're giving the employer a face-saving opportunity to confirm they won't enforce an unenforceable provision. Many employers will quietly back down rather than risk a lawsuit they're likely to lose.
Delivery and Timing
  • When to send: Ideally 2–4 weeks before starting a new job, giving the employer time to respond but not so much time they can prepare litigation
  • How to send: Certified mail + email to General Counsel or HR Director
  • Copies: Send to your new employer's legal team (if applicable) so they're aware of the issue
Possible Employer Responses
Response What It Means Your Next Step
Written confirmation of non-enforcement Employer agrees restriction is void; gives you clearance Keep the letter and proceed with new job
No response Employer may be hoping you'll comply out of fear, or may be deciding whether to sue Proceed with new job; most employers don't sue if they don't respond to challenge letter
Letter asserting enforceability Employer claims restriction is valid and threatens to enforce Consult attorney; consider filing declaratory judgment action before they file for TRO
Cease and desist / demand letter Employer threatens immediate legal action if you violate restriction Do not ignore; consult attorney immediately; may need to file declaratory action or defend TRO motion
Lawsuit or TRO filing Employer files for emergency injunction to prevent you from starting new job Hire attorney immediately to oppose TRO and counterclaim for declaratory relief and attorneys' fees
⚠️ TRO Risk: If the employer files for a Temporary Restraining Order (TRO), the court may hold a hearing within days. You'll need an attorney immediately to oppose the TRO and argue that the restriction is void under § 16600.
Negotiating a Release

If the employer insists the restriction is valid, you can negotiate a release in exchange for:

  • Payment: Employer pays you (e.g., 3–6 months' salary) to release you from the restriction
  • Narrowing the restriction: Limit geographic scope, duration, or definition of "competitor"
  • Carve-out for specific employer: Employer agrees you can work for [New Company] without violating the agreement
  • Standstill: Both parties agree not to sue while you work at the new job; if no problems arise in 6–12 months, employer releases you
💡 Strategic Leverage: Emphasize that litigation will be expensive for the employer, they're likely to lose (§ 16600 is very strong), and they'll have to pay your attorneys' fees if you prevail. Most employers prefer to settle or back down rather than spend $50,000–$100,000 litigating a restriction that's probably void.
Coordinating with Your New Employer

Your new employer has a stake in this too (they're hiring you). Many new employers will:

  • Indemnify you (agree to cover legal fees if former employer sues)
  • Provide legal counsel to defend against TROs or lawsuits
  • Negotiate directly with the former employer to resolve the dispute
  • Structure your role to avoid arguable competition (at least initially)

Inform your new employer's legal team about the restrictive covenant before you accept the offer, so they can assess the risk and provide support.

Declaratory Judgment Action

If the employer refuses to back down, you can file a declaratory judgment action asking the court to declare the restrictive covenant void.

Aspect Details
Venue California Superior Court (or federal court if diversity jurisdiction)
Claims Declaratory relief (restriction is void under § 16600); request for attorneys' fees
Advantages You control timing and forum; shifts burden to employer to prove enforceability; fee-shifting available
Timeline 6–12 months to summary judgment; most cases settle or are dismissed on demurrer/motion to dismiss
Outcome Court declares restriction void; employer may be ordered to pay your attorneys' fees
Defending Against a TRO or Preliminary Injunction

If the employer files for emergency injunctive relief, you must oppose vigorously:

  1. Show § 16600 voids the restriction: Cite Edwards and argue employer cannot show likelihood of success on the merits
  2. No irreparable harm: Employer's harm (if any) is economic and can be remedied by damages; not a basis for injunction
  3. Overbreadth: Highlight vague terms, excessive scope, lack of trade secret protection
  4. Public policy: Enforcing the restriction would harm public policy favoring employee mobility
  5. Unclean hands: If employer violated wage laws, harassed you, or acted in bad faith, argue they don't deserve equitable relief
✅ California Courts Disfavor Injunctions: TROs and preliminary injunctions in noncompete cases are rare in California because § 16600 is so strong. Employers face a very high bar to prove likelihood of success when the restriction is facially void.
Affirmative Defenses

If the employer sues to enforce the restriction, raise these defenses:

Defense Argument
§ 16600 Restriction is void as a restraint on trade; no exceptions apply
Overbreadth Restriction is vague, overly broad, or not reasonably necessary to protect legitimate business interests
Lack of consideration Restriction was imposed after employment started with no new benefit (pay raise, promotion, etc.)
SB 699 violation Employer violated SB 699 by entering into noncompete after Jan 1, 2024
No trade secrets Employer cannot identify any actual trade secrets you possess or threaten to disclose
Unclean hands Employer violated wage laws, engaged in misconduct, or otherwise acted inequitably
Laches / waiver Employer delayed enforcing restriction, or previously allowed other employees to violate it
Counterclaims and Damages

If the employer sues you, consider counterclaiming for:

  • Declaratory relief: Ask the court to declare the restriction void
  • Attorneys' fees: Under California Code of Civil Procedure § 1021.5 (private attorney general statute) or Civil Code § 1717 (contract fee-shifting)
  • SB 699 penalties: If employer entered into or attempted to enforce a noncompete after Jan 1, 2024
  • Unfair competition (Bus. & Prof. Code § 17200): Employer's attempt to enforce void restriction is an unfair business practice
  • Wrongful termination / retaliation: If employer fired you for refusing to sign restriction or for challenging it
💡 Fee-Shifting: If you prevail in defeating a noncompete, you can often recover attorneys' fees under § 1021.5 (if the case serves an important public interest in employee mobility) or § 1717 (if the agreement has a fee-shifting clause). This makes litigation economically viable.
Settlement Considerations

Most noncompete disputes settle. Typical settlement terms:

  • Release: Employer releases you from the restriction entirely
  • Narrow carve-out: Employer agrees you can work for [specific company] or in [specific role] without violating the agreement
  • Standstill: Both parties agree not to sue for X months; restriction expires or is waived if no issues arise
  • Payment: Employer pays you to settle (often to cover your legal fees and as consideration for release)
  • NDA carve-down: Employer narrows the definition of "confidential information" to exclude general knowledge
How I Can Help

I represent employees in challenging noncompete, nonsolicitation, and overbroad NDA provisions. I provide strategic counsel from demand letters through trial, with a focus on securing your right to work and recovering attorneys' fees from employers who attempt to enforce void restrictions.

Services Offered
  • Agreement review and enforceability analysis: Detailed review of your restrictive covenants and assessment of enforceability under California law
  • Pre-litigation challenge letters: Professional demand letters citing § 16600, Edwards, and SB 699 to prompt employer to back down
  • Negotiation and settlement: Securing written releases or narrowed restrictions without litigation
  • Declaratory judgment actions: Filing proactive lawsuits to declare restrictions void and recover attorneys' fees
  • TRO/injunction defense: Emergency opposition to employer's attempts to enjoin you from starting new job
  • Litigation and counterclaims: Defending against breach-of-contract claims and pursuing SB 699 penalties, fee-shifting, and UCL claims
My Approach
  1. Thorough legal analysis: I review every provision of your agreement to identify void restrictions, overbroad terms, and affirmative defenses
  2. Strategic challenge letters: I draft persuasive demand letters that cite controlling California law and give the employer a face-saving way to back down
  3. Proactive declaratory actions: If needed, I file declaratory judgment actions to seize the initiative and force the employer to defend the restriction on your turf
  4. Aggressive TRO defense: If the employer seeks emergency injunctive relief, I respond immediately with strong § 16600 arguments and public policy defenses
  5. Fee-shifting leverage: I use California's fee-shifting statutes to create settlement pressure—employers know they'll pay my fees if they lose
🔓 Bound by a Noncompete or Overbroad NDA?

Contact me for a consultation. I'll review your agreement, assess enforceability, and help you secure your right to work.

Email: owner@terms.law
Frequently Asked Questions
Rarely. Only if you're an owner selling a business or goodwill (§ 16601), a partner dissolving a partnership (§ 16602), or an LLC member dissociating (§ 16602.5). Regular W-2 employees are never subject to enforceable noncompetes in California, regardless of what they signed.
California courts will still apply § 16600 if you live or work in California or if the employer does business here. Choice-of-law clauses cannot override California's strong public policy against noncompetes. Application Group v. Hunter Group (1998).
They can try, but they'll lose. § 16600 makes the restriction void, meaning it has no legal effect. If they sue, you can quickly move to dismiss or for summary judgment, and you'll likely recover your attorneys' fees. Many employers won't sue because they know they'll lose and have to pay your fees.
Generally no. The California Supreme Court held in Edwards that § 16600 applies to any restraint on competition, not just traditional noncompetes. Customer nonsolicits that materially restrain your ability to work are void. Only extremely narrow restrictions tied to trade secret protection might survive.
No. General industry knowledge, skills, and experience are not protectable as trade secrets. An NDA cannot prevent you from using knowledge you gained on the job, even if the employer considers it "confidential." Only true trade secrets (proprietary formulas, non-public customer data, etc.) are protectable.
SB 699, effective January 1, 2024, makes it illegal for employers to enter into noncompete agreements (previously they were just unenforceable). Employers who violate this face civil penalties. Additionally, employers who entered into noncompetes before 2024 must notify employees that those agreements are void. If your employer tries to enforce a noncompete, you can pursue penalties under SB 699.