California Noncompetes Are Void, and Since 2024 Having One Is Its Own Problem

California has voided employee noncompete agreements for well over a century. What changed in 2024 is that the law stopped being purely defensive. It is no longer only that a California noncompete cannot be enforced — it is that including one, or attempting to enforce one, is now its own violation, with a private right of action and attorney’s fees attached.

Employers with California employees who have not revisited their template since 2023 are carrying a document that creates liability by existing.

The baseline rule

Business and Professions Code section 16600 provides that, with narrow exceptions, every contract restraining anyone from engaging in a lawful profession, trade or business is void. Not voidable, not enforceable-if-reasonable — void.

California courts have read that literally. The “narrow restraint” doctrine that other jurisdictions use to save a limited noncompete was rejected by the California Supreme Court, and the rule of reason that governs in most states simply does not apply. A noncompete that would be plainly enforceable in Texas or North Carolina is worth nothing here.

The exceptions are genuine but narrow, and they are about the sale of a business rather than about employment. Section 16601 permits a covenant given by someone selling the goodwill of a business or their entire ownership interest. Sections 16602 and 16602.5 do something similar on the dissolution of a partnership or a limited liability company. These are real tools and they are used constantly in transactions — but they attach to a seller, not to an employee.

What the 2024 statutes added

Two bills took effect on 1 January 2024 and changed the posture considerably.

Section 16600.5 makes a noncompete that is void under California law unenforceable regardless of where and when the contract was signed. An employer cannot rescue the clause by having the employee sign in another state, by choosing another state’s law, or by pointing out that the agreement predates the employee’s move to California. It also makes it unlawful to attempt to enforce such a clause, and it gives the employee or former employee a private right of action for injunctive relief, actual damages, and — the part that changes behaviour — attorney’s fees for a prevailing employee.

Section 16600.1 makes it unlawful to include a void noncompete in an employment contract at all, or to require an employee to sign one. It also imposed a notice obligation: employers had to give written, individualised notice to current employees and to former employees employed after 1 January 2022 whose contracts contained such a clause, telling them it is void. The deadline for that notice was 14 February 2024. A failure is an act of unfair competition under section 17200.

The combined effect is that a stale template is not a dormant risk. It is a live one, and the fee-shifting provision means it is worth a plaintiff’s lawyer’s time in a way that it previously was not.

What an employer can still protect

This is not a rule that leaves employers defenceless; it redirects them toward protections California does recognise.

Trade secrets. The California Uniform Trade Secrets Act protects genuine trade secrets, and it does so without any noncompete. The work is in the fundamentals: identifying what is actually secret, restricting access to it, marking it, and having confidentiality obligations that are specific rather than boilerplate. An employer who has done that is in a far stronger position than one relying on a clause that is void.

Confidentiality, properly drawn. A confidentiality agreement is enforceable in California. One drafted so broadly that it operates as a de facto restraint on working in the industry invites the argument that it is a noncompete wearing a different hat.

Sale-of-business covenants. If an employee is also selling ownership in a transaction, section 16601 is available and is used. The covenant must be tied to the sale, not bolted onto ordinary employment.

Customer non-solicitation, carefully. California courts have been sceptical of customer non-solicit provisions where they function as a restraint on practising a trade. Employee non-solicit clauses have also drawn adverse treatment. Neither should be assumed enforceable, and both should be reviewed rather than carried forward from an out-of-state form.

The California business law page covers employment agreements and entity work more broadly.

What this looks like from the employee’s side

An employee who has been handed a noncompete by a California employer, or who is leaving one job in California for a competitor, is in a considerably stronger position than they usually believe. The clause in the drawer is void. The letter from the former employer’s counsel warning of litigation is, in most configurations, an attempt to enforce something the legislature has now declared unlawful to attempt to enforce.

That does not make every departure risk-free, and it is important to be honest about where the real exposure sits. An employee who leaves with the customer list, downloads the pricing model on the way out, or solicits the entire team over a weekend has a trade secret and duty-of-loyalty problem that has nothing to do with the noncompete and is not cured by section 16600. The distinction between competing — which California protects — and taking the former employer’s property in order to compete is the line that actually matters.

The practical advice is the same on both sides of it: leave with nothing that belongs to the employer, do not begin soliciting while still on the payroll, and get the agreement read before signing anything on the way out the door, including a separation agreement that may contain its own restraints.

The practical audit

For an employer with California staff, the review is short and worth doing in one sitting. Pull the current offer letter and employment agreement template and remove any noncompete language. Check whether the confidentiality clause is drawn to protect defined information or is broad enough to read as a restraint. Look at the customer and employee non-solicitation provisions with fresh eyes rather than assuming they carried over lawfully from another state. Check the choice-of-law and venue clauses, which no longer do the work they were put there to do. And identify what the business genuinely needs to protect, which is almost always specific information rather than the abstract ability to stop someone working.

Most companies find the exercise clarifying. The clause they were relying on was never going to be enforced here, and the protections that would actually have helped — access controls, defined confidential information, sensible onboarding and offboarding — were the ones nobody had got around to.

Frequently Asked Questions

We are based in Texas and our California employees signed a Texas-law agreement. Does that hold?

Generally no. Section 16600.5 is aimed squarely at that arrangement: a noncompete void under California law is unenforceable in California regardless of where it was signed or which state’s law the contract selects. Multi-state employers usually need a California-specific version rather than a choice-of-law clause.

We never sent the notice by February 2024. What now?

The deadline has passed and cannot be recreated, but the exposure is reduced by fixing the underlying problem: remove the clause from the template, stop asking anyone to sign it, and take advice on notifying affected employees now. Continuing to circulate the old form is the version of this that keeps getting worse.

Can we protect our customer list?

A genuine customer list developed at real expense and kept confidential may qualify for trade secret protection, which is a stronger and more durable route in California than a non-solicit clause. Whether a particular list qualifies depends on how it was built and how it has been treated.

Talk it through

If you employ people in California under an agreement written somewhere else, a review of the template is a short piece of work with a large downside attached to skipping it. The California contact page has both state lines.