Employer threatening to sue over non-compete - I thought these weren't enforceable in California?

I'm freaking out. I just accepted a job at a competitor and gave my two weeks notice. Today I got a letter from my current employer's lawyer saying I signed a non-compete and they'll sue me if I join the competitor.

I work in tech in San Francisco. I thought California banned non-competes? But their letter cites a bunch of legal stuff and says I agreed to be bound by Texas law (company HQ is in Austin).

The non-compete says I can't work for any competitor for 2 years after leaving. That would basically end my career in this field. What do I do?

You're right that California bans non-competes. Business and Professions Code Section 16600 is crystal clear: "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 Texas choice of law thing is a common tactic employers try. It usually doesn't work when the employee is based in California.

Let me give you some context here because the law has gotten even stronger in your favor recently.

California's longstanding rule: Section 16600 has banned non-competes for over 100 years. But there was sometimes ambiguity about choice of law provisions and narrow exceptions.

2024 changes: Two new laws took effect January 1, 2024:

• SB 699: Makes it unlawful for an employer to enter into or attempt to enforce a non-compete against an employee who works in California, regardless of where the contract was signed or what state's law it claims to apply.
• AB 1076: Requires employers to notify current and former employees (who worked there after Jan 1, 2022) that any non-compete clauses in their contracts are void.

That Texas choice of law clause is almost certainly unenforceable if you work in California. California courts apply California law to protect California workers.

Wait, so they were supposed to send me a notice that my non-compete was void? I never got anything like that.

Their letter also mentions "trade secrets" and says I have "confidential information" that I can't use. Is that different from a non-compete?

On the notice: Yes, under AB 1076 they should have sent you written notice by February 14, 2024 (or your last day if after that). Their failure to do so is itself a violation of the Labor Code, and you could potentially sue them for it.

On trade secrets: This is important - trade secret protections ARE enforceable and are separate from non-competes. California absolutely protects trade secrets under the Uniform Trade Secrets Act (CUTSA).

The difference:

• Non-compete (VOID): "You can't work for a competitor"
• Trade secret protection (VALID): "You can't take our proprietary customer lists, source code, formulas, etc. to a competitor"

You CAN work for a competitor. You CANNOT bring trade secrets with you. Don't take any documents, files, or data when you leave. Don't copy anything to personal devices. This is the legitimate concern employers have, and courts take it seriously.

I've been through this exact situation twice in my career. Both times the employer sent scary letters, and both times nothing happened when I took the job anyway.

Companies do this to scare employees. It's often a bluff because they know they'll lose in California court. But you should still take it seriously and maybe get an attorney to respond to their letter.

One thing I learned: some employers try the "inevitable disclosure" doctrine - arguing that you'll inevitably disclose trade secrets just by doing your job at a competitor. California courts have largely rejected this. The Edwards v. Arthur Andersen case is the big one.

HR person here (don't hate me). I'll give you the inside perspective.

We still put non-competes in offer letters even though we know they're unenforceable in CA. Why? A few reasons:

1. Employees in other states where they are enforceable
2. Some employees don't know the law and it deters them
3. We sometimes "forget" to remove them from California templates

When someone actually leaves for a competitor, legal usually sends a scary letter. 90% of the time that's the end of it. They're not going to spend $100K+ on a lawsuit they'll probably lose. The letter is just CYA for the company.

The exception is if you actually took something - downloaded files, forwarded emails to personal accounts, etc. Then they'll go after you hard.

@HRDirector_Anon makes a good point about the practical reality, but I want to add - the new laws (SB 699) actually create penalties for employers who try to enforce void non-competes.

Under the new law, employers can be liable for damages and attorney's fees if they attempt to enforce an unenforceable non-compete. So the calculus is changing. Smart companies are removing non-competes from their California employee agreements entirely.

@ScaredEngineer - my practical advice:

1. Don't ignore the letter - Have an employment attorney send a response citing B&P Code 16600 and the 2024 laws. This often ends the matter.
2. Keep it clean - Make sure you haven't taken any company files, data, or documents. Return all company property.
3. Document everything - Keep copies of the threat letters. You might have a claim against them for violating the new laws.
4. Talk to your new employer - They may have dealt with this before and might even help with legal costs.

Thank you all so much. I talked to my new employer and they said they've seen this before and aren't worried. They also offered to cover legal fees if my current employer actually sues (unlikely according to them).

I'm hiring an attorney to respond to the letter. I made sure I didn't take anything - I actually asked IT to verify that I hadn't downloaded anything to external drives and got that in writing.

The whole experience has been stressful but knowing the law is on my side helps a lot.

Jumping in late but wanted to share my experience. I was in a similar situation last year. Got the threatening letter, hired an attorney who sent a response citing 16600, and never heard from them again.

Total legal cost: $800 for the response letter. Worth every penny for peace of mind.

One thing to watch out for: even if the non-compete is void, be careful about non-solicitation clauses for a reasonable period. Courts are more mixed on whether you can solicit former coworkers or clients, especially if you signed something specific about that. The rules are different from pure non-competes.