Void for employees

Non-compete law in California

California voids every contract that restrains someone from a lawful profession, trade or business, including employee noncompetes however narrowly drawn, wherever and whenever signed. The only statutory carve-outs are for sellers of a business (goodwill or all ownership interest) and for partners or LLC members on dissolution or exit. Separately, a 2025 law (Health & Safety Code § 1191(d), effective Jan. 1, 2026) voids clauses in private-equity or hedge-fund management/asset contracts with physician or dental practices that bar a provider from competing with the practice after leaving; and from Jan. 1, 2027 employment-contract 'stay-or-pay' terms (repayment of debts, penalties or fees on leaving a specific employer, with listed exceptions) are unlawful and treated as void restraints under § 16600 (B&P § 16608, Lab. Code § 926, as amended by Stats. 2026, ch. 889 (AB 1697), effective Sept. 30, 2026).

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From January 1, 2027, noncompetes with workers in California are void under a change already enacted.

B&P § 16608 / Lab. Code § 926 apply: for contracts entered into on or after this date, employment-contract terms requiring a worker to pay an employer, training provider or debt collector a debt, penalty, fee or cost because employment with a specific employer ends are unlawful and void as restraints under § 16600 (exceptions include government loan-repayment programs, qualifying transferable-credential tuition agreements, approved apprenticeships, certain discretionary bonuses, residential property financing and limited PTO advances). Source

Employee non-competes
Void by statute
Pay floor
None in the statute
Notice
By Feb. 14, 2024 employers had to send an individualized written notice (to last known address and email) to current employees, and former employees employed after Jan. 1, 2022, whose contracts had a void noncompete, saying it is void (§ 16600.1(b)). Putting a noncompete in an employment contract, or requiring one, is unlawful (§ 16600.1(a)).

Exceptions and special rules

  • Sale of a business: the statute allows a non-compete given by a seller.
  • Partner may agree not to compete on dissolution of the partnership or on dissociation (§ 16602)
  • LLC member may agree not to compete upon or in anticipation of dissolution or termination of the member's interest (§ 16602.5)
  • Providers in physician or dental practices that contract with a private equity group or hedge fund (management contracts or sale of practice real estate/assets). Such a contract may not include a clause barring any provider in the practice from competing with the practice after the provider's termination or resignation (or certain non-disparagement clauses); a violating provision is void, unenforceable and against public policy. An otherwise enforceable sale-of-business noncompete is not affected, but such a contract may not operate as an employee noncompete. The Attorney General may seek injunctive relief and fees. (Cal. Health & Safety Code § 1191(d)-(e) (Stats. 2025, ch. 409 (SB 351), effective 2026-01-01))

Non-solicitation clauses

No statutory exception for employee non-solicitation clauses; § 16600(b)(1) directs that the statute be read broadly per Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937. Whether a particular customer or employee non-solicit survives is a case-law question not answered by the statute text.

Contracts naming another state's law

§ 16600.5(a)-(b): a contract void under the chapter is unenforceable regardless of where and when signed; employer may not attempt to enforce it even if signed and employment held outside California. Lab. Code § 925: employer may not require a California-based employee, as a condition of employment, to adjudicate claims outside California or give up California law (voidable by employee; exception if employee was individually represented by counsel in negotiating; applies to contracts entered, modified or extended on/after Jan. 1, 2017).

Remedies

§ 16600.5(e): employee, former employee or prospective employee may sue for injunctive relief and/or actual damages, plus mandatory reasonable attorney's fees and costs if they prevail; employer that enters into or tries to enforce a void contract commits a civil violation (§ 16600.5(d)). A § 16600.1 violation is unfair competition under § 17200 et seq.

Which agreements it covers

Bus. & Prof. Code 16600.5 makes covenants void regardless of where and when signed; no signing-date cutoff.

Recent changes

  • 2026-09-30. AB 1697 (Stats. 2026, ch. 889) amended B&P § 16608 and Lab. Code § 926 (effective Sept. 30, 2026): 'stay-or-pay' contract terms (requiring a worker to repay a debt or pay a penalty, fee or cost if employment with a specific employer ends; listed exceptions) are unlawful and void under § 16600 only for contracts entered into on or after Jan. 1, 2027; the versions of these sections in effect on Jan. 1, 2026 are inoperative for all of 2026. Private action: greater of actual damages or $5,000 per worker, plus injunctive relief and fees (Lab. Code § 926(c)). Source
  • 2026-01-01. SB 351 (Stats. 2025, ch. 409) added Health & Safety Code §§ 1190-1192: private-equity/hedge-fund contracts with physician or dental practices may not bar providers from competing with the practice after termination or resignation (§ 1191(d)). Source
  • 2024-01-01. SB 699 (Stats. 2023 ch. 157) added § 16600.5 (void regardless of where signed; private right of action; fees). Source
  • 2024-01-01. AB 1076 (Stats. 2023 ch. 828) amended § 16600 (codifying Edwards, subd. (b)-(c)) and added § 16600.1 (unlawful to include a noncompete; Feb. 14, 2024 notice deadline). Source

Primary sources

Checker

What the statute says for these facts

Four facts. The answer leads with what the statute does at that pay, then names any change already enacted, then quotes the details with their citations.

The person who would sign

Several statutes treat contractors differently.

Other states on file