Non-Compete California: Are They Enforceable?

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 2,224 reviews

Jump to Section

Need help with a Noncompete Agreement?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

Non-Compete Agreements in California 2021

Employers in California may require new hires to enter into a non-compete agreement , an employment contract that prevents you from competing with the hiring company for a specified period. Not all types of employment require workers to sign non-competition agreements . Primarily, they are reserved for employees who learn secret information or specializations that give their employers a competitive advantage in the market.

However, many court systems routinely disapprove of non-compete agreements since it may place an undue limitation on a former employee’s ability and right to earn a living wage. As such, they are highly scrutinized by courts and unlawful in some locations, including California.

If you are asked to sign a non-compete in California, speak with California employment lawyers as soon as possible. A legal professional can provide sound advice while helping you navigate civil redress if an employer violates your rights. Avoid making legal mistakes since doing so can potentially result in future problems that limit your potential or cause you to incur civil damages against your former employer.

What is a Non-Compete Agreement?

A non-compete agreement (NCA), also known as a non-competition agreement, falls under types of employment contracts that are legally binding and require an employee to agree to not work for the competition or in a specified trade for a specific time after submitting a resignation or receiving a termination. NCAs keep valuable employees with trade secrets, such as intellectual property (IP), from exploiting internal company information in the event that you begin working for a competitor or decide to start your own business.

The majority of non-compete agreements contain the following pieces of information:

  • Names and address of the parties involved
  • Agreement’s effective date
  • Purpose of the agreement
  • Geographic areas affected by the agreement
  • Compensation provided and terms
  • Dated signatures of both agreeing parties
  • Exhibits and attachments for detailed information

For a non-compete agreement to be legally valid, it must offer compensation at the time it is signed, is used to protect legitimate employer interests, and is reasonable in scope and breadth of geographic limitations. Also, the laws that govern the contract must recognize the enforceability of such agreements.

How Does a Non-Compete Agreement Work?

While non-compete agreements seem reasonable, you must also consider how they control your actions after you have quit your job. Not only does this limitation clash with free enterprise and the right to earn a living, but it also affects whether you can start a company, work for a competitor, or hire former colleagues. For this reason, most states, including California, do not recognize them as valid employment contracts .

The Agreement Must Be Reasonable

If you live in a U.S. state that recognizes non-competition agreements, the particulars of the contract may violate local, state, and federal laws. Keep in mind that a non-compete agreement limits your future endeavors, which is why the states that allow them to require them to be reasonable in that they do not create an undue or unnecessary burden on your life after you leave your position.

Examples of reasonableness include:

  • Only prohibiting you from competing for the shortest period possible
  • Not casting too wide of a net on the competitive market
  • Defining specific elements that reasonably define competition
  • Extending contracts to specialized workers versus lower-level employees

If you are currently engaged in a non-compete agreement that is legally unenforceable, you can get out of the employment contract on this basis alone. Ensure that you speak with an attorney to determine the best way to navigate this situation legally.

Non-Competition Agreements Are Contracts

At their core, non-compete agreements are contracts that include your acknowledgment of giving up a certain amount of control that you would usually have otherwise. For your compromise, you must be given something in exchange, typically in the form of employee wages.


Get Free Bids to Compare

Leverage our network of lawyers, request free bids, and find the right lawyer for the job.

Get Bids Now

Is a Non-Compete Enforceable in California?

A non-compete is not enforceable in the State of California. Under California Business and Professions Codes, the law prohibits an employer from restraining anyone who is engaged in legal practice or trade. Any existing non-compete agreements in California are considered null and void by courts.

If an employer demands that employees sign non-competes as a condition of employment, each violation’s penalties are steep. For each offense, the employer is subject to a $100 fine per employee per pay period. While this may not appear to be like a lot of money, consider an example first.

Imagine that an employer has 50 employees that are under a non-compete agreement in California that has lasted for 24 weeks. In this example, the employer would be fined $120,000. This amount of money is enough to make employers think twice about remaining compliant with the law.

Aggrieved employees can also seek civil compensation if the unenforceable agreement affected their livelihoods. If an employee receives a favorable verdict, he or she can recover all reasonable attorneys’ fees and court costs and 25 percent of the imposed penalty.

California’s Ban on Non-Compete Agreements

California’s ban on non-compete agreements are clear in that an employer may not prohibit you from actively engaging in competitive activities upon the termination of your employment. While the employer can ask you not to disclose trade secrets and internal company information, it cannot make you agree to not work for a specific organization, industry, or location.

While some states do allow restrictions on non-competes, it is also worth noting that California has the most stringent laws and penalties in the country. California enforces strong public policies against employment contracts that restrict employee rights, including non-compete and independent contractor agreements.

Contractscounsel Non Compete California

Image via Pexels by Tae Fuller

Exceptions To Consider

As with most rules, there are exceptions. While California prohibits the enforceability of non-competition provisions in employment contracts , it does permit them for a minimal number of circumstances where a person owns a partial interest in the business.

California employers can sidestep non-competes in the following instances:

  • EXCEPTION 1: If the employee sells business goodwill
  • EXCEPTION 2: If the owner sells his or her business interests
  • EXCEPTION 3: If the owner sells all operating and goodwill assets

Upon the business’ dissolution, a member of the company may agree to a non-compete if operating a similar business in the geographic area. Goodwill is the company’s name and brand reputation. Employees with stock options are not considered company owners for purposes of non-competition agreements.

Non-Solicitation Agreements and California Law

In lieu of non-compete agreements, California employers may attempt to use non-solicitation clauses in employment contracts. These provisions limit what employees can do between one and two years after leaving the organization.

A non-solicitation agreement prohibits a former employee from soliciting an employer’s customers and employees upon resignation. Like non-competition agreements, California Business and Professional Codes also prohibit non-solicitation agreements.

If you are engaged in a non-compete or non-solicitation agreement in California, it is vital to know that the contract could be still enforceable so as long as it is tailored reasonably for the situation and does not infringe upon employee rights. However, specific elements can make them unenforceable, which means that it is critical to get legal help from an employment attorney with experience in this area.

Mistakes in employment contacts will lead to problems in the future. Speak with California employment lawyers for personalized legal guidance. If you need to draft non-competition or non-compete agreements that are valid in California, sign-up for ContractsCounsel today and post your project for free.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

View Jonathan
Member Since:
February 8, 2021

Jonathan D.

Principal
Free Consultation
Get Free Proposal
Miami
4 Yrs Experience
Licensed in FL
Florida International University School of Law

Miami-based duly licensed attorney and customs broker with significant experience in various types of supply chain business agreements, as well as experience in entertainment law.

View Albert
Member Since:
February 8, 2021

Albert M.

Attorney
Free Consultation
Get Free Proposal
Woodbury, NJ
19 Yrs Experience
Licensed in NJ
Rutgers School of Law - Camden

I am a New Jersey licensed attorney and I have been in practice for over seventeen years. My practice mainly consists of representing public entities (municipalities, school boards, etc) and businesses, both small and large. In that capacity, much of work consists of drafting, reviewing and revising contracts.

View Jose
Member Since:
February 13, 2021

Jose P.

Partner
Free Consultation
Get Free Proposal
San Antonio, Dallas
22 Yrs Experience
Licensed in TX
University of Pennsylvania

I am a corporate lawyer with expertise working with small businesses, venture capital and healthcare. Previously, I worked at large law firms, as well as head attorney for companies. I graduated from Harvard College and University of Pennsylvania Law School. I speak 5 languages (Spanish, French, Italian and Russian, plus English), visited over 60 countries, and used to compete in salsa dancing!

View Briana
Member Since:
February 15, 2021

Briana C.

Founder, Branch Legal LLC
Free Consultation
Get Free Proposal
Boston
10 Yrs Experience
Licensed in CA, MA, NY
Columbia University School of Law

Legal services cost too much, and are often of low quality. I have devoted my law practice to providing the best work at the most affordable price—in everything from defending small businesses against patent trolls to advising multinational corporations on regulatory compliance to steering couples through a divorce.

View Meghan
Member Since:
February 15, 2021

Meghan P.

Attorney
Free Consultation
Get Free Proposal
Denver
4 Yrs Experience
Licensed in CA
University of Dayton

I am a licensed attorney and a member of the California Bar. I graduated from the University of Dayton School of Law's Program in Law and Technology. I love IP, tech transfers, licensing, and how the internet and developing technology is changing the legal landscape. I've interned at both corporations and boutique firms, and I've taken extensive specialized classes in intellectual property and technology law.

View Jo Ann
Member Since:
February 22, 2021

Jo Ann J.

Partner
Free Consultation
Get Free Proposal
Boston, MA
26 Yrs Experience
Licensed in MA
Suffolk Universtiy Law School

Jo Ann has been practicing for over 20 years, working primarily with high growth companies from inception through exit and all points in between. She is skilled in Mergers & Acquisitions, Contractual Agreements (including founders agreements, voting agreements, licensing agreements, terms of service, privacy policies, stockholder agreements, operating agreements, equity incentive plans, employment agreements, vendor agreements and other commercial agreements), Corporate Governance and Due Diligence.

View Charlotte
Member Since:
February 25, 2021

Charlotte L.

Self-Employed Legal Consultant
Free Consultation
Get Free Proposal
Arlington, VA
8 Yrs Experience
Licensed in DC, VA
University of Virginia School of Law

I hold a B.S. in Accounting and a B.A. in Philosophy from Virginia Tech (2009). I received my J.D. from the University of Virginia School of Law in 2012. I am an associate member of the Virginia Bar and an active member of the DC bar. Currently, I am working as a self-employed legal consultant and attorney. Primarily my clients are start-up companies for which I perform various types of legal work, including negotiating and drafting settlement, preparing operating agreements and partnership agreements, assisting in moving companies to incorporate in new states and setting up companies to become registered in a state, assisting with employment matters, drafting non-disclosure agreements, assisting with private placement offerings, and researching issues on intellectual property, local regulations, privacy laws, corporate governance, and many other facets of the law, as the need arises. I have previously practiced as an attorney at a small DC securities law firm and worked at Deloitte Financial Advisory Services LLC. My work experience is dynamic and includes many short-term and long term experience that span across areas such as maintaining my own blog, freelance writing, and dog walking. My diverse background has provided me with a stong skill set that can be easily adapted for new areas of work and indicates my ability to quickly learn for a wide array of clients.

View Don
Member Since:
March 1, 2021

Don G.

Attorney at law
Free Consultation
Get Free Proposal
Lafayette, LA
21 Yrs Experience
Licensed in TX
Texas Tech School of Law

Texas licensed attorney specializing for 20 years in Business and Contract law. My services include General Business Law Advisement; Contract Review and Drafting; Legal Research and Writing, including Motion Practice; Business Formation; Article or Instructive Writing; and more. For more insight into my skills and experience, please feel free to visit my LinkedIn profile or contact me with any questions.

View Jeremiah
Member Since:
March 5, 2021

Jeremiah C.

Partner/Attorney at Law
Free Consultation
Get Free Proposal
Houston, TX
14 Yrs Experience
Licensed in NV, TX
Thomas Jefferson

Creative, results driven business & technology executive with 24 years of experience (13+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. My engagements often include legal consultation & advisory roles, drafting of NDAs, TOS & Privacy Policies, contracts and corporate law, business strategy advice & consulting, in-house counsel, Founder & entrepreneur guidance and other roles as needed by my clients. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.

View Adam
Member Since:
March 5, 2021

Adam B.

Managing Partner
Free Consultation
Get Free Proposal
San Mateo, California
24 Yrs Experience
Licensed in CA
McGeorge School of Law

Seasoned technology lawyer with 22+ years of experience working with the hottest start-ups through IPO and Fortune 50. My focus is primarily technology transactions with an emphasis on SaaS and Privacy, but I also provide GC services for more active clients.

View Benjamin
Member Since:
March 11, 2021

Benjamin W.

Founder
Free Consultation
Get Free Proposal
Los Angeles, CA
7 Yrs Experience
Licensed in CA
UCLA School of Law

I am a California-barred attorney specializing in business contracting needs. My areas of expertise include contract law, corporate formation, employment law, including independent contractor compliance, regulatory compliance and licensing, and general corporate law. I truly enjoy getting to know my clients, whether they are big businesses, small start-ups looking to launch, or individuals needing legal guidance. Some of my recent projects include: -drafting business purchase and sale agreements -drafting independent contractor agreements -creating influencer agreements -creating compliance policies and procedures for businesses in highly regulated industries -drafting service contracts -advising on CA legality of hiring gig workers including effects of Prop 22 and AB5 -forming LLCs -drafting terms of service and privacy policies -reviewing employment contracts I received my JD from UCLA School of Law and have been practicing for over five years in this area. I’m an avid reader and writer and believe those skills have served me well in my practice. I also complete continuing education courses regularly to ensure I am up-to-date on best practices for my clients. I pride myself on providing useful and accurate legal advice without complex and confusing jargon. I look forward to learning about your specific needs and helping you to accomplish your goals. Please reach out to learn more about my process and see if we are a good fit!

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call