California Has Banned Non-Compete Clauses For Decades
California has long and firmly prohibited non-compete agreements through Business and Professions Code Section 16600, which voids any contract restraining someone from engaging in a lawful profession, trade, or business of any kind whatsoever, in any industry or field. Unlike most other states, California courts have consistently refused to enforce these clauses even when they were narrowly written or reasonable on their face, treating the underlying public policy as essentially absolute and non-negotiable.
Recent New Legislation Made The Ban Even Stronger
Two entirely separate laws that took effect in 2024, Senate Bill 699 and Assembly Bill 1076, expanded this existing prohibition significantly beyond what earlier case law had already firmly established over many years. A San Diego executive employment lawyer sees these changes come up constantly now, since the new statutes make clear that non-compete provisions are void no matter how narrowly they are drafted, and they now extend to agreements signed outside California entirely.
Out Of State Agreements No Longer Provide An Exception
Before these two recent legal changes took effect, employers sometimes argued that a non-compete signed in another state, or governing employment performed outside California, might still be enforceable against a former employee in that state. Senate Bill 699 closed that loophole entirely by voiding non-compete provisions regardless of where or when an employee signed them, as long as the person is now working or seeking work in California.
Employers Faced A New Notice Requirement
Assembly Bill 1076 specifically required employers statewide to notify current and former employees in writing by the deadline of February 14, 2024, if those employees had signed agreements containing now-void non-compete clauses of any kind whatsoever. This notice requirement means many executives may have already received formal confirmation that a clause they thought was binding no longer carries any legal weight whatsoever under current California law.
What This Actually Means For A Working Executive
An executive currently negotiating a brand new employment agreement, or carefully reviewing an existing one already in place, should understand exactly what protections California state law now provides in this particular area of practice.
- Non-compete clauses in employment contracts are void regardless of how they are worded or drafted by counsel
- This protection applies even to agreements signed while the executive was working outside California entirely
- Employees now have a private right of action to sue over an unlawful clause in court directly
- Violating employers may face liability for actual damages and reasonable attorney fees incurred throughout
A Narrow Legal Exception Still Exists Today
California’s broad ban on non-competes does not apply to agreements made in connection with the sale of an entire business, the sale of an ownership interest in one, or the dissolution of a partnership or limited liability company under any circumstances whatsoever. An executive who also holds equity in the company, particularly one negotiating an exit or acquisition, should understand how this narrow exception might actually apply to their specific situation and the negotiated terms of any deal going forward.
Non-Solicitation And Confidentiality Provisions Are Genuinely Different
While non-compete clauses remain broadly unenforceable in California, courts generally still allow reasonable confidentiality provisions and certain narrowly drafted non-solicitation agreements protecting genuine trade secrets from unauthorized disclosure to a competitor. A San Diego executive employment lawyer can help distinguish between provisions that remain enforceable and language that actually crosses into void non-compete territory under current law and interpretation.
Getting Your Own Employment Agreement Fully Reviewed
The experienced team at Grey Ocean, PC helps San Diego executives understand exactly what their employment agreements actually require, and what provisions California law will simply not enforce regardless of how they are written or negotiated. Reach out so we can review your entire contract line by line and make absolutely sure you fully understand your legal rights before signing or negotiating anything further with your current employer or a prospective new one entirely.
