California Employee NDA Guide

Overview: California's Pro-Employee Stance

California has the strongest employee mobility protections in the nation. The state's public policy strongly favors an employee's right to change jobs and use their skills freely. This philosophy shapes how employee NDAs are drafted, enforced, and challenged in California.

For employers, this means California employee NDAs must be carefully crafted to protect legitimate trade secrets without crossing into unenforceable territory. For employees, understanding these protections helps you know your rights and push back against overreaching agreements.

California's Non-Compete Ban

What This Means in Practice

• Traditional non-competes are void: You cannot prohibit a California employee from working for a competitor
• Geographic restrictions are void: You cannot limit where an employee can work after leaving
• Customer restrictions may be void: Broad non-solicitation provisions that effectively prevent working in the field can be voided
• Out-of-state employers are affected: Section 16600 applies to California residents regardless of where the employer is located or what the contract says

NDAs That Function as Non-Competes

California courts will void NDA provisions that, while not explicitly calling themselves non-competes, have the practical effect of preventing someone from working in their field. Watch for:

• Overly broad definitions of "confidential information" that encompass all knowledge gained at the job
• Restrictions on using "general skills and knowledge" developed during employment
• Non-solicitation clauses that effectively prevent working for any competitor
• Garden leave provisions designed to keep employees out of the market

Labor Code Section 2870: Protecting Employee Inventions

Four Requirements for Protection

An invention is protected under Labor Code 2870 if ALL of the following are true:

1. Developed entirely on the employee's own time: Not during work hours, breaks, or overtime
2. Without using employer equipment, supplies, or facilities: Using your own computer, tools, and workspace
3. Without using employer trade secret information: The invention can't incorporate confidential company information
4. Does not relate to employer's business OR was not developed using job knowledge:
   • The invention doesn't relate to the employer's current or reasonably anticipated business, OR
   • The invention doesn't result from work performed for the employer

Practical Tips for Employees

What IS Enforceable in California

Despite strong employee protections, California employers can still protect legitimate confidential information:

Drafting California-Compliant NDAs

For Employers

1. Define confidential information specifically: Avoid catch-all language. List categories of information that are actually confidential
2. Include Labor Code 2870 notice: Required by law and demonstrates good faith
3. Carve out general knowledge: Explicitly exclude general skills, knowledge, and industry information
4. Remove or modify non-compete language: Any language that could be read as a non-compete should be removed
5. Narrow non-solicitation provisions: Focus on protecting specific, documented customer relationships, not broad market segments
6. Include DTSA whistleblower notice: Federal law requirement

For Employees

1. Review the entire agreement carefully: Don't assume California law automatically protects you
2. Identify non-compete-like provisions: Flag anything that restricts where you can work or who you can work for
3. Negotiate overly broad definitions: Push back on "confidential information" definitions that include general knowledge
4. Complete Exhibit A thoroughly: List all prior inventions and side projects you want to protect
5. Confirm Labor Code 2870 notice: Make sure the agreement includes this required notice
6. Keep a copy: Always retain a signed copy for your records

Key California Cases

Understanding how California courts have ruled helps predict how your NDA will be treated:

• Edwards v. Arthur Andersen LLP (2008): California Supreme Court confirmed that Section 16600 voids non-competes regardless of how "reasonable" they might be. There's no reasonableness exception in California.
• Fillpoint, LLC v. Maas (2012): Non-solicitation agreements that effectively prevent competition may be void under 16600.
• AMN Healthcare, Inc. v. Aya Healthcare Services (2018): Employee non-solicitation provisions (preventing poaching of coworkers) are generally enforceable.

Remote Workers and Choice of Law

If you're a California resident working remotely for an out-of-state employer, California law typically applies to you regardless of:

• Where the employer is headquartered
• What state's law the contract specifies
• Where you signed the agreement

California courts have consistently held that Section 16600's protections extend to California residents as a matter of public policy that cannot be waived by contract choice of law provisions.