California Non-Compete Agreement: Why They Are Void (2026)

If you are an employer or employee in California asking whether a non-compete agreement is enforceable, the short answer is almost never. California has the strongest non-compete ban in the United States, codified at California Business and Professions Code §16600, which declares that «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 California legislature reaffirmed and strengthened this prohibition in 2024 with AB 1076 and SB 699, which extend the ban to out-of-state non-competes whose employees move to California and impose civil penalties on employers who attempt to enforce them.

This page explains what California employers and employees should use instead of a non-compete — confidentiality (NDA), trade secret protection, customer non-solicitation, and employee non-solicitation — and provides free templates for each in PDF and Word format. These are the only post-employment restraints that California courts will enforce against ordinary employees.

A Concrete Example

A California-based startup attempts to enforce a non-compete against a senior engineer who has left for a competitor. The startup’s legal team files for injunctive relief. The competitor’s counsel responds with a one-paragraph filing citing Business and Professions Code §16600. The court dismisses with prejudice and orders the startup to pay the engineer’s attorney fees — approximately $42,000.

Under SB 699 (2024), the exposure goes the wrong way: attempting to enforce a void non-compete in California is itself the cause of action. The startup’s out-of-state choice-of-law clause is treated as void. The fix is what this page describes — substitute the unenforceable non-compete with a legally robust NDA plus a narrowly tailored trade-secret-based non-solicit. Those work in California; the non-compete does not.

Why Non-Competes Are Void in California

Most people who type “non-compete agreement template” into Google don’t actually want a perfect document — they want one that will hold up when it matters, in California, without forcing them to pay a lawyer hundreds of dollars for what should be a routine paperwork exercise. That is what this page is for. Below you will find a non-compete agreement in California that incorporates the standard provisions courts expect, in both PDF and editable Word format.

• SB 699 (effective Jan 1, 2024): Voids out-of-state non-competes against employees who relocate to California or perform work in California, regardless of choice-of-law clauses.
• AB 1076 (effective Jan 1, 2024): Requires employers to notify, in writing by Feb 14, 2024, any current or former employee whose contract contains a void non-compete that the clause is unenforceable. Failure is a $2,500 per violation civil penalty.

Narrow Exceptions to the California Non-Compete Ban

There are three narrow statutory exceptions where non-competes remain enforceable in California:

• Sale of business (B&P §16601): The seller of a business may agree not to compete with the buyer in the geographic area where the business operated.
• Dissolution of partnership (B&P §16602): A partner leaving a partnership may agree not to compete in the geographic area of the partnership’s business.
• Dissolution of LLC (B&P §16602.5): Parallel exception for departing LLC members.

None of these exceptions apply to ordinary employees. An employee who signs a non-compete as a condition of employment in California has signed an unenforceable contract.

What California Employers CAN Use Instead

1. Confidentiality Agreement (NDA)

California fully enforces non-disclosure agreements that protect trade secrets and genuinely confidential business information. The key is that the protected information must actually be confidential — generic skills, industry knowledge, and information already in the public domain cannot be locked up. The California Uniform Trade Secrets Act (Civil Code §3426 et seq.) provides the underlying framework, and a well-drafted NDA defines what is protected, the employee’s duty of confidentiality, the term of the obligation, and remedies for breach.

2. Customer Non-Solicitation

California’s position on customer non-solicits has evolved. The seminal 2008 case Edwards v. Arthur Andersen held that customer non-solicits are restraints on trade and void under §16600 unless narrowly tailored to protect trade secrets (such as a confidential customer list that qualifies as a trade secret under the UTSA). A blanket «do not solicit our clients for two years» clause is unenforceable; a narrowly drafted «do not use the confidential customer list you took with you» clause may be enforceable as trade-secret protection.

3. Employee Non-Solicitation

The 2018 AMN Healthcare v. Aya Healthcare decision applied Edwards to hold that employee non-solicitation clauses are likewise generally void as restraints on trade in California, unless narrowly tailored to protect a legitimate trade-secret interest (e.g., a confidential roster of specialized contractors). Generic «do not hire our employees» clauses are unenforceable against ordinary employees.

Frequently Asked Questions

I signed a non-compete in California. Am I bound?

Almost certainly not. If the contract restrains you from working in your trade or profession, it is void under §16600 — even if you signed it voluntarily. You generally do not need to «get out of» the contract; it is unenforceable from the start.

My employer is based in Texas but I work remotely in California. Which law applies?

Under SB 699 (2024), California law applies to any employee who performs work in California, and the non-compete is void regardless of any Texas choice-of-law clause. California courts will not enforce another state’s non-compete against an employee working in California.

Can my California employer make me sign an NDA?

Yes. NDAs are fully enforceable in California provided they protect genuinely confidential information. The NDA cannot be drafted so broadly that it effectively functions as a non-compete (e.g., «any information learned during employment is confidential»).

What if I’m selling my business?

The B&P §16601 sale-of-business exception applies. You may agree not to compete with the buyer in the geographic area of the business for a reasonable period — typically 2-5 years. This is one of the few enforceable non-competes in California.

Are non-solicitation clauses enforceable in California?

Only if narrowly tailored to protect a genuine trade-secret interest. Generic non-solicits of customers or employees are void as restraints on trade under Edwards and AMN Healthcare.

My out-of-state employer says they’ll sue me if I take a job with a competitor. What should I do?

Consult a California employment attorney before changing jobs. Under SB 699, employers who attempt to enforce a void non-compete against a California employee are liable for the employee’s attorney fees and damages. The exposure runs against the employer, not the employee.

Download the California Alternatives Package

The download below contains the California-compliant alternatives: a Confidentiality Agreement (NDA), a narrowly tailored customer non-solicit, and an employee non-solicit framed around trade-secret protection. Use these instead of a non-compete in any California employment, consulting, or contractor relationship.

Final note: nothing on this page is legal advice. The template reflects the current consensus best practice in U.S. law as of the publication date, but state-specific rules can differ in ways that matter. For routine, small-dollar uses, the template is usually sufficient. For anything where the downside risk exceeds a few thousand dollars, paying for an attorney review is the cheapest insurance you can buy.

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