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:
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.
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 |
NDAs are generally enforceable in California, but only if they:
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:
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.
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" |
Use this flowchart to determine if your restriction is likely enforceable:
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 |
Assess your negotiating position:
Consider sending a pre-emptive challenge letter if:
[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]
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]
| 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 |
If the employer insists the restriction is valid, you can negotiate a release in exchange for:
Your new employer has a stake in this too (they're hiring you). Many new employers will:
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.
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 |
If the employer files for emergency injunctive relief, you must oppose vigorously:
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 |
If the employer sues you, consider counterclaiming for:
Most noncompete disputes settle. Typical settlement terms:
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.
Contact me for a consultation. I'll review your agreement, assess enforceability, and help you secure your right to work.
Email: owner@terms.law