California has long protected the ability of workers to change jobs and take their skills elsewhere, a policy many observers connect to the mobility that fueled the state’s technology economy. Recent legislation has strengthened that stance considerably. For an employer building a team or an employee weighing a move, the practical questions are which restrictive agreements hold up in California and which do not, and the answers have grown clearer and stricter over the past few years.
The Rule Against Noncompetes
The starting point is that noncompete agreements are almost never enforceable in California. Business and Professions Code Section 16600 states that any contract restraining someone from engaging in a lawful profession, trade, or business is void. Unlike states that permit reasonable noncompetes limited by geography or a short time period, California takes a categorical approach, favoring an economy in which workers can move freely between employers, use their general skills, and start competing ventures.
Recent Legislation: SB 699 and AB 1076
Two laws that took effect in 2024 reinforced these protections. SB 699 extended the reach of Section 16600 to void noncompete agreements even when they were signed out of state, so an employee who signed a valid noncompete in another state finds it unenforceable after relocating to California for work, closing a geographic loophole employers had used. AB 1076 codified existing case law confirming that noncompetes are void in the employment context regardless of how narrowly they are written, and it added a notice requirement: by February 14, 2024, employers had to inform current employees, and former employees who had worked for them after January 1, 2022, in writing that any previously signed noncompete clauses were void.
Consequences for Employers
California does more than void these contracts; it penalizes employers who try to enforce them or include them to intimidate. Attempting to enforce an unlawful restrictive covenant exposes a company to civil suits, injunctions, and liability for the prevailing employee’s attorney’s fees. Employees now have a private right of action to seek an injunction or actual damages when a company tries to enforce an illegal clause, and the law prohibits retaliation, so an employer that takes adverse action against a worker for asserting these rights may face a wrongful termination claim based on the refusal to sign.
Narrow Exceptions to the Ban
The ban is broad but not absolute, and the exceptions generally involve business ownership rather than ordinary employment. A noncompete can be enforced when someone sells the goodwill of a business, sells their entire ownership interest in a corporation, or dissolves a partnership, since in those situations the restriction protects the buyer’s investment.
Non-Solicitation Clauses
Faced with the noncompete ban, some employers have turned to non-solicitation clauses to keep departing employees from approaching clients or coworkers. California courts generally treat customer non-solicitation agreements the same as noncompetes, meaning they are void under Section 16600. A former employee is free to contact former clients, as long as they are not using stolen confidential data to do so. Employee non-solicitation clauses, which restrict recruiting former coworkers, have also drawn increasing skepticism and invalidation in California courts, so employers relying on either type should proceed cautiously and with legal advice.
NDAs and Confidentiality Agreements
With noncompetes off the table, confidentiality agreements carry more of the weight of protecting sensitive information, and the distinction between the two matters. Non-disclosure agreements remain enforceable in California when they protect genuine proprietary information. An employee who leaves for a competitor may take their general knowledge and skills, but they cannot take customer databases, source code, financial projections, or confidential marketing methods. For a business, the practical focus is protecting trade secrets without leaning on a noncompete, which means defining precisely what qualifies as a trade secret and limiting access to sensitive data to those who need it. Well-drafted NDAs, rather than blanket bans on future competition, do the rest.
The Silenced No More Act
Confidentiality has limits, particularly when it comes to workplace misconduct. Under the Silenced No More Act, an employer cannot use a non-disclosure or severance agreement to stop an employee from speaking about harassment, discrimination, or other conduct the employee reasonably believes is unlawful. NDAs can protect trade secrets, but they cannot be used to conceal that kind of behavior.
Drafting Employment Agreements
For employers, the safest course is to review onboarding materials, offer letters, and handbooks and remove any language that unlawfully restricts an employee’s ability to work after leaving. A severability clause is worth including, so that if a court finds one provision invalid, such as an overly broad confidentiality term, the remainder of the agreement stays intact. For employees, the guidance is simpler: read agreements before signing, understand that the right to work for a competitor is protected by state law even if a contract says otherwise, keep personal copies of anything signed, and seek advice if a former employer threatens legal action over a new job.
Working Within California’s Framework
California’s approach to restrictive agreements follows a consistent logic: the state protects an employee’s fundamental right to work while still allowing an employer to safeguard actual trade secrets. Noncompetes and most non-solicitation clauses fall on the unenforceable side of that line, while carefully drafted NDAs remain a legitimate tool. Employers who bring their agreements in line with these rules, and employees who understand their protections, can operate with a clear sense of what will and will not hold up.