Are employee non-compete agreements enforceable in California?
No. California voids employee non-compete agreements by statute. Business and Professions Code section 16600 makes any contract that restrains someone from engaging in a lawful profession, trade, or business void to that extent, and the Legislature has directed courts to read the ban broadly — voiding any noncompete in employment no matter how narrowly tailored — unless it fits a specific statutory exception.
This makes California the most employee-protective non-compete jurisdiction in the country. Unlike a reasonableness state, California does not weigh a covenant's duration or geography — a clause that restrains a former employee from competing is simply outside the statute and therefore void. The California Supreme Court settled this in Edwards v. Arthur Andersen LLP, where it struck a customer non-solicitation covenant and refused to adopt the Ninth Circuit's narrow-restraint exception .
The 2024 amendment to section 16600 wrote that holding into the statute, removing any argument that a short or geographically modest non-compete might survive .
What a California employer can protect instead is a narrow set of interests — the goodwill it buys when it acquires a business, and its trade secrets and confidential information. Each is addressed in its own question below.
Do not paper a California employee with an out-of-state non-compete form and assume a court will narrow it to something enforceable. California treats a conventional employee non-compete as void rather than reforming it. As the questions below explain, merely including or attempting to enforce one now carries its own statutory exposure.
Sources for this answer
Primary law
A.1 Cal. Bus. & Prof. Code § 16600Section 16600(a) voids any contract that restrains a person from engaging in a lawful profession, trade, or business, except as provided in the chapter.
Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.
See Cal. Bus. & Prof. Code § 16600(a).
Primary law
A.2 Cal. Bus. & Prof. Code § 16600Section 16600(b)(1) directs courts to read the restraint ban broadly to void any noncompete in an employment context, no matter how narrowly tailored, unless it satisfies a statutory exception.
This section shall be read broadly, in accordance with Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception in this chapter.
See Cal. Bus. & Prof. Code § 16600(b)(1).
Case law · 2008-08-07
A.3 Edwards v. Arthur Andersen LLPEdwards holds that section 16600 prohibits employee non-competition agreements absent a statutory exception, and rejects the Ninth Circuit's narrow-restraint exception.
We reject Andersen's contention that we should adopt a narrow-restraint exception to section 16600 and leave it to the Legislature, if it chooses, either to relax the statutory restrictions or adopt additional exceptions to the prohibition-against-restraint rule under section 16600.
See Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008).
Are customer non-solicitation clauses enforceable in California?
No, not in the employment context. California treats a clause barring a former employee from soliciting or servicing the employer's customers as a restraint on trade that is void under section 16600 — the same rule that voids a non-compete. Edwards itself struck a customer non-solicitation covenant.
Because Edwards rejected any reasonableness or narrow-restraint analysis in employment, a customer non-solicitation clause does not become enforceable just because it is limited to a handful of accounts or a short period. If it forecloses any part of the former employee's ability to compete for business, it is void .
The one place a customer non-solicitation covenant can survive is where it is genuinely part of the sale of a business rather than an employment relationship — and even then courts read the exception narrowly. In Fillpoint, LLC v. Maas, the Court of Appeal refused to let a buyer enforce a noncompetition-and-nonsolicitation covenant that sat in the employment agreement rather than the purchase agreement .
Do not rely on a customer non-solicitation or non-dealing clause as a softer substitute for a non-compete in a California employment agreement. Courts analyze it as the same kind of restraint and void it; the durable protection for customer relationships is a properly scoped trade-secret and confidentiality program, addressed below.
Sources for this answer
Case law · 2008-08-07
B.1 Edwards v. Arthur Andersen LLPEdwards struck a customer non-solicitation covenant and rejected the narrow-restraint exception, so customer non-solicits are analyzed as restraints void under section 16600 in the employment context.
We reject Andersen's contention that we should adopt a narrow-restraint exception to section 16600 and leave it to the Legislature, if it chooses, either to relax the statutory restrictions or adopt additional exceptions to the prohibition-against-restraint rule under section 16600.
See Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008).
Case law · 2012-08-24
B.2 Fillpoint, LLC v. MaasFillpoint holds that a noncompetition and nonsolicitation covenant placed in an employment agreement, rather than the purchase agreement, is void and unenforceable and does not fit the sale-of-business exception.
In this case, when we read the two noncompetition covenants together, we hold that the noncompetition and nonsolicitation covenant contained in the employment agreement is void and unenforceable under California law.
See Fillpoint, LLC v. Maas, 208 Cal. App. 4th 1170 (2012).
Can a California employer restrict soliciting its employees?
It is high-risk and probably void. An older decision, Loral Corp. v. Moyes, upheld an employee anti-raiding covenant as only a slight restraint, but the more recent appellate decision in AMN Healthcare v. Aya Healthcare held an employee non-solicitation clause void under section 16600 because it restrained the recruiters' chosen profession, and questioned whether Loral survives Edwards. The California Supreme Court has not resolved the split.
For decades employers relied on Loral, where the court treated a clause barring a departing executive from raiding his former employer's staff as a minor restriction that did not foreclose anyone's livelihood .
In 2018 the Court of Appeal in AMN Healthcare invalidated an employee non-solicitation clause imposed on nurse recruiters and openly questioned whether Loral survives Edwards .
Federal district courts applying California law have largely followed AMN and extended it beyond the recruiting industry. Until the California Supreme Court speaks, treat a standard employee non-solicitation or no-hire clause as carrying a high risk of invalidation — and, as the next question explains, including a void clause now carries its own statutory exposure.
Do not assume Loral still protects a no-hire or anti-raiding clause. After AMN Healthcare, an employee non-solicitation provision is more likely void than enforceable, and a clause that bars hiring a former colleague who applies on their own initiative is weaker still. Protect the workforce through trade-secret and confidentiality measures rather than a raiding ban.
Sources for this answer
Case law · 2018-11-01
C.1 AMN Healthcare, Inc. v. Aya Healthcare Services, Inc.AMN Healthcare independently concluded that the employee non-solicitation provision was void under section 16600 and questioned whether Loral's reasonableness approach survives Edwards.
Turning to the instant case, we independently conclude that the nonsolicitation of employee provision in the CNDA is void under section 16600.
See AMN Healthcare, Inc. v. Aya Healthcare Servs., Inc., 28 Cal. App. 5th 923 (2018).
Case law · 1985-11-08
C.2 Loral Corp. v. MoyesLoral upheld an employee anti-raiding covenant, treating it as no more significant a restraint than a restriction on soliciting customers or disclosing confidential information — the older view AMN Healthcare later questioned.
This does not appear to be any more of a significant restraint on his engaging in his profession, trade or business than a restraint on solicitation of customers or on disclosure of confidential information.
See Loral Corp. v. Moyes, 174 Cal. App. 3d 268 (1985).
What is an employer's exposure for including or enforcing a void non-compete?
Substantial. Since January 1, 2024, two laws turned California's ban from a defense into an offensive weapon. Senate Bill 699 (section 16600.5) makes entering into or attempting to enforce a void non-compete a civil violation with a private right of action and mandatory attorney's fees, reaching contracts signed anywhere. Assembly Bill 1076 (section 16600.1) made including such a clause unlawful, required employers to notify affected workers by February 14, 2024, and made a violation an act of unfair competition.
The private right of action is what ended the old practice of leaving an unenforceable scarecrow covenant in a contract to deter departures. Entering or enforcing a void clause is now itself the violation .
A prevailing worker recovers fees on top of any damages or injunction, which makes even a low-value case worth bringing .
AB 1076 layered on a compliance duty: it is unlawful to include the clause at all, and a violation is folded into the Unfair Competition Law.
There is a further trap for employers who present void terms. Labor Code section 432.5 forbids requiring an employee to agree in writing to any term the employer knows to be prohibited by law — which a void non-compete now plainly is — exposing the employer to representative penalty claims . California's Attorney General has publicly reinforced that noncompetes are generally illegal and that workers can act on these rights .
Audit California employment agreements and remove void non-compete, customer-non-solicit, and overbroad confidentiality clauses now — do not leave them in as a deterrent. Under section 16600.5, entering into or attempting to enforce a void clause is a civil violation with fee-shifting; separately, under section 16600.1 the inclusion of the clause is itself unlawful, and the unmet AB 1076 notice obligation (due February 14, 2024) remains an unfair-competition exposure for employers who never sent it.
Sources for this answer
Primary law
D.1 Cal. Bus. & Prof. Code § 16600.5Section 16600.5(a), (d) make a void non-compete unenforceable regardless of where or when signed and make entering into or attempting to enforce one a civil violation.
An employer that enters into a contract that is void under this chapter or attempts to enforce a contract that is void under this chapter commits a civil violation.
See Cal. Bus. & Prof. Code § 16600.5(d).
Primary law
D.3 Cal. Bus. & Prof. Code § 16600.5Section 16600.5(e) gives employees, former employees, and prospective employees a private action for injunctive relief or actual damages and entitles a prevailing worker to reasonable attorney's fees and costs.
In addition to the remedies described in paragraph (1), a prevailing employee, former employee, or prospective employee in an action based on a violation of this chapter shall be entitled to recover reasonable attorney's fees and costs.
See Cal. Bus. & Prof. Code § 16600.5(e)(2).
Primary law
D.2 Cal. Bus. & Prof. Code § 16600.1Section 16600.1(a) makes it unlawful to include a noncompete clause in an employment contract or to require an employee to enter one that does not satisfy a statutory exception.
It shall be unlawful to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy an exception in this chapter.
See Cal. Bus. & Prof. Code § 16600.1(a).
Primary law
D.4 Cal. Bus. & Prof. Code § 16600.1Section 16600.1(c) makes a violation of the section — including the failure to send the required February 14, 2024 notice — an act of unfair competition under Chapter 5 (Section 17200).
A violation of this section constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).
See Cal. Bus. & Prof. Code § 16600.1(c).
Primary law
D.5 Cal. Lab. Code § 432.5Labor Code section 432.5 prohibits requiring an employee or applicant to agree in writing to any term the employer knows to be prohibited by law — the predicate for representative penalty claims over void non-compete terms.
No employer, or agent, manager, superintendent, or officer thereof, shall require any employee or applicant for employment to agree, in writing, to any term or condition which is known by such employer, or agent, manager, superintendent, or officer thereof to be prohibited by law.
See Cal. Lab. Code § 432.5.
Agency guidance · 2024-10-15
D.6 California Attorney General — Consumer Alert on Noncompete AgreementsThe California Attorney General's October 2024 consumer alert states that SB 699 makes it generally illegal for employers to enter into noncompete agreements with California employees, signaling active enforcement.
Effective January 1, 2024, Senate Bill (SB) 699 makes it generally illegal for employers to enter into noncompete agreements with California employees.
See Cal. Att'y Gen., Consumer Alert: Noncompete Agreements (Oct. 15, 2024).
Can a choice-of-law or forum-selection clause escape California's non-compete ban?
Usually not for a California employee. Labor Code section 925 lets an employee who primarily resides and works in California void an out-of-state choice-of-law or forum-selection clause imposed as a condition of employment, and section 16600.5 says a void non-compete is unenforceable regardless of where it was signed. But California's extraterritorial reach has limits: federal courts have applied another state's law to enforce a non-compete where that state's interest was greater.
Section 925 is the core anti-circumvention rule. A California-based employee can void a clause that forces litigation elsewhere or strips California law, unless the employee was individually represented by counsel in negotiating it .
Section 925 reaches contracts entered into, modified, or extended on or after January 1, 2017, so it does not retroactively void an older choice-of-law or forum clause . Section 16600.5 reinforces the rule for newer disputes by declaring void non-competes unenforceable no matter where they were signed .
The limit appears when the dispute lands outside California. In DraftKings Inc. v. Hermalyn, the First Circuit applied Massachusetts law, enforced a Massachusetts non-compete against an executive who had moved to California, and let the injunction stand — declining to treat California's policy as overriding .
“Having considered the matter on an expedited basis, we let the challenged order stand.”
A California employee who primarily works in California should treat section 925 as the strongest tool against an out-of-state forum or governing-law clause — but recognize that section 16600.5 is not a guaranteed shield in another state's courts. An employee who never worked in California cannot reliably invoke the ban by relocating after the fact.
Sources for this answer
Primary law
E.1 Cal. Lab. Code § 925Labor Code section 925(a) bars requiring a California-resident-and-working employee, as a condition of employment, to adjudicate California claims elsewhere or to give up the substantive protection of California law; by subdivision (f) it applies to contracts entered into, modified, or extended on or after January 1, 2017, and by subdivision (e) it does not apply where the employee was individually represented by counsel in negotiating the clause.
An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following: (1) Require the employee to adjudicate outside of California a claim arising in California. (2) Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.
See Cal. Lab. Code § 925(a).
Primary law
E.2 Cal. Bus. & Prof. Code § 16600.5Section 16600.5(a) provides that a contract void under the chapter is unenforceable regardless of where and when it was signed.
Any contract that is void under this chapter is unenforceable regardless of where and when the contract was signed.
See Cal. Bus. & Prof. Code § 16600.5(a).
Case law · 2024-09-26
E.3 DraftKings Inc. v. HermalynIn DraftKings v. Hermalyn the First Circuit applied Massachusetts law, upheld a preliminary injunction enforcing a Massachusetts non-compete against an executive who moved to California, and declined to treat California's policy as controlling — illustrating the limits of section 16600.5's extraterritorial reach.
Having considered the matter on an expedited basis, we let the challenged order stand.
See DraftKings Inc. v. Hermalyn, 118 F.4th 416 (1st Cir. 2024).
Are non-competes tied to the sale of a business or ownership interest enforceable in California?
Yes, within narrow statutory limits. A person who sells the goodwill of a business or disposes of an ownership interest may agree not to compete within the geographic area where the business operated (section 16601), and parallel rules cover partners (section 16602) and LLC members (section 16602.5). Courts read these exceptions strictly and tie them to the goodwill actually transferred.
The sale-of-business exception exists so a buyer can protect the goodwill it pays for; without it, a seller could reopen next door and take back the customer base just sold. But the covenant must be tied to a genuine sale and limited to the area where the business was carried on .
A covenant that is really an employment restraint dressed up as a sale term will not qualify. In Fillpoint, the court read the purchase and employment agreements together and voided the employment-agreement covenant as outside the exception . Where the transaction is a real disposition of an ownership interest, the exception applies — in Blue Mountain Enterprises, LLC v. Owen, the court enforced a customer non-solicitation covenant tied to an owner's sale of his entire interest .
For a partial sale — where the owner sells some interest but stays involved — the California Supreme Court's decision in Ixchel Pharma, LLC v. Biogen, Inc. supplies the analytical frame: outside the employment and full-sale contexts, a restraint on business dealings is judged under a rule of reason rather than treated as void per se . The Court of Appeal applied that frame to a partial sale in Samuelian v. Life Generations Healthcare, LLC .
Tie a sale-of-business covenant to the goodwill actually sold and to the geographic area where the business operated, and keep it in the purchase agreement — not the employee's employment agreement. A covenant bootstrapped onto employment, or scoped beyond the acquired goodwill, falls outside sections 16601–16602.5 and is void.
Sources for this answer
Primary law
F.1 Cal. Bus. & Prof. Code § 16601Section 16601 lets a person who sells the goodwill of a business, or an owner disposing of an ownership interest, agree not to carry on a similar business within the specified geographic area where the business was carried on, so long as the buyer continues a like business there.
Any person who sells the goodwill of a business, or any owner of a business entity selling or otherwise disposing of all of his or her ownership interest in the business entity, or any owner of a business entity that sells (a) all or substantially all of its operating assets together with the goodwill of the business entity, (b) all or substantially all of the operating assets of a division or a subsidiary of the business entity together with the goodwill of that division or subsidiary, or (c) all of the ownership interest of any subsidiary, may agree with the buyer to refrain from carrying on a similar business within a specified geographic area in which the business so sold, or that of the business entity, division, or subsidiary has been carried on, so long as the buyer, or any person deriving title to the goodwill or ownership interest from the buyer, carries on a like business therein.
See Cal. Bus. & Prof. Code § 16601.
Primary law
F.2 Cal. Bus. & Prof. Code § 16602Section 16602 lets a partner, on or in anticipation of dissolution or dissociation, agree not to carry on a similar business within the specified geographic area where the partnership did business, so long as another partner carries on a like business there.
Any partner may, upon or in anticipation of any of the circumstances described in subdivision (b), agree that he or she will not carry on a similar business within a specified geographic area where the partnership business has been transacted, so long as any other member of the partnership, or any person deriving title to the business or its goodwill from any such other member of the partnership, carries on a like business therein.
See Cal. Bus. & Prof. Code § 16602(a).
Primary law
F.3 Cal. Bus. & Prof. Code § 16602.5Section 16602.5 lets an LLC member, on or in anticipation of dissolution or the termination of the member's interest, agree not to carry on a similar business within the specified geographic area where the LLC did business, so long as another member carries on a like business there.
Any member may, upon or in anticipation of a dissolution of, or the termination of his or her interest in, a limited liability company (including a series of a limited liability company formed under the laws of a jurisdiction recognizing such a series), agree that he or she or it will not carry on a similar business within a specified geographic area where the limited liability company business has been transacted, so long as any other member of the limited liability company, or any person deriving title to the business or its goodwill from any such other member of the limited liability company, carries on a like business therein.
See Cal. Bus. & Prof. Code § 16602.5.
Case law · 2012-08-24
F.4 Fillpoint, LLC v. MaasFillpoint read the purchase and employment agreements together and held the noncompetition and nonsolicitation covenant in the employment agreement void and unenforceable — it did not fit the limited sale-of-business exception.
In this case, when we read the two noncompetition covenants together, we hold that the noncompetition and nonsolicitation covenant contained in the employment agreement is void and unenforceable under California law.
See Fillpoint, LLC v. Maas, 208 Cal. App. 4th 1170 (2012).
Case law · 2022-01-28
F.5 Blue Mountain Enterprises, LLC v. OwenBlue Mountain held that section 16601 applied as a matter of law where the owner disposed of all of his ownership interest while agreeing not to carry on a similar business in the area sold, enforcing a customer non-solicitation covenant under the exception.
Here, the trial court correctly found that section 16601 applies as a matter of law because Owen “dispos[ed] of all of his . . . ownership interest” under the Contribution Agreement while concurrently agreeing under the Employment Agreement to “refrain from carrying on a similar business within a specified geographic area in which the business so sold.”
See Blue Mountain Enters., LLC v. Owen, 74 Cal. App. 5th 537 (2022).
Case law · 2020-08-03
F.6 Ixchel Pharma, LLC v. Biogen, Inc.Ixchel holds that, outside the employment and sale-of-business contexts, section 16600 does not render business-dealing restraints void per se but subjects them to a rule of reason.
In context, section 16600 is best read not to render void per se all contractual restraints on business dealings, but rather to subject such restraints to a rule of reason.
See Ixchel Pharma, LLC v. Biogen, Inc., 9 Cal. 5th 1130 (2020).
Case law · 2024-09-16
F.7 Samuelian v. Life Generations Healthcare, LLCSamuelian applied Ixchel and held that a noncompetition restraint arising from a partial sale of a business interest is evaluated under the reasonableness standard rather than treated as void per se.
We agree the reasonableness standard applies to partial sales.
See Samuelian v. Life Generations Healthcare, LLC (Cal. Ct. App. 2024).
Can private equity or hedge funds impose non-competes on California physicians and dentists?
No — for contracts under the new healthcare law that takes effect January 1, 2026. Senate Bill 351 (Health and Safety Code section 1191) bars a private equity group or hedge fund involved with a physician or dental practice from using a management or asset-sale contract to stop a provider from competing with the practice after leaving, and voids any such clause .
SB 351 targets the contractual structures private equity uses to manage medical and dental practices. A management or asset-sale agreement with a PE- or hedge-fund-controlled entity cannot include a clause barring a provider from competing with the practice after a termination or resignation .
The law preserves a genuine sale-of-business non-compete but draws a sharp line: a management or asset-sale contract cannot operate as an employee non-compete against the provider .
This restriction applies to contracts under the SB 351 framework taking effect January 1, 2026. Private equity and hedge-fund sponsors structuring management services organization (MSO) arrangements with California medical or dental practices should remove provider non-compete clauses from those management and asset-sale contracts and confirm that any retained sale-of-business covenant does not function as an employee non-compete .
Sources for this answer
Primary law
G.1 Cal. Health & Safety Code § 1191 (SB 351)Section 1191(d) bars a management or asset-sale contract with a private-equity- or hedge-fund-controlled entity from including any clause barring a provider from competing with the practice after a termination or resignation.
shall not include any clause barring any provider in that practice from doing either of the following: (A) Competing with that practice in the event of a termination or resignation of that provider from that practice.
See Cal. Health & Safety Code § 1191(d)(1).
Primary law
G.2 Cal. Health & Safety Code § 1191 (SB 351)Section 1191(d)(3) preserves an otherwise enforceable sale-of-business noncompete but provides that a contract described in the subdivision shall not operate as an employee noncompete agreement.
An otherwise enforceable sale of business noncompete agreement. However, a contract described in this subdivision shall not operate as an employee noncompete agreement.
See Cal. Health & Safety Code § 1191(d)(3)(A).
Are stay-or-pay and training-repayment (TRAP) clauses enforceable in California?
Increasingly not. For contracts entered into on or after January 1, 2026, Assembly Bill 692 (Business and Professions Code section 16608) makes most terms that impose a debt, penalty, or fee on a worker who leaves unlawful, and treats such a contract as void under section 16600. Labor Code section 926 gives the worker a civil action with statutory damages of $5,000 per worker.
Section 16608 reaches the stay-or-pay structures — replacement-hire fees, training-repayment provisions (TRAPs), quit fees, and similar termination-triggered charges — that impose a penalty, fee, or cost on a worker who leaves and so function as financial deterrents to departure .
A contract that runs afoul of the section is itself a restraint of trade and void under section 16600 — but only prospectively, for contracts entered on or after the January 1, 2026 effective date .
The remedy is meaningful: a worker or worker representative can recover actual damages or $5,000 per worker, whichever is greater, plus injunctive relief and fees .
The stay-or-pay rules apply to contracts entered into on or after January 1, 2026, and the statute carves out specific arrangements — for example, a genuine sign-on bonus with separate terms and a retention period of no more than two years, and tuition for a transferable credential offered apart from the employment contract. Review any training-repayment or retention-bonus program against the section 16608 exceptions before using it in California.
Sources for this answer
Primary law
H.3 Cal. Bus. & Prof. Code § 16608 (AB 692)Section 16608(b)(1) makes it unlawful, for covered contracts entered on or after January 1, 2026, to include a term that imposes any penalty, fee, or cost on a worker if the worker's employment terminates.
Imposes any penalty, fee, or cost on a worker if the worker's employment or work relationship with a specific employer terminates.
See Cal. Bus. & Prof. Code § 16608(b)(1)(C).
Primary law
H.1 Cal. Bus. & Prof. Code § 16608 (AB 692)Section 16608(c) treats an unlawful stay-or-pay contract as a restraint of trade void under section 16600, but only if it was entered into on or after January 1, 2026.
A contract that is unlawful under subdivision (b) is a contract restraining a person from engaging in a lawful profession, trade, or business, and is void under Section 16600 only if the contract was entered into on or after January 1, 2026.
See Cal. Bus. & Prof. Code § 16608(c).
Primary law
H.2 Cal. Lab. Code § 926 (AB 692)Labor Code section 926 gives a worker or worker representative a civil action for a section 16608 violation, with liability of actual damages or $5,000 per worker, whichever is greater, plus injunctive relief and attorney's fees.
Any person found liable for a violation of this section shall be liable for actual damages sustained by the worker or workers on whose behalf the case is brought, or five thousand dollars ($5,000) per worker, whichever is greater, in addition to injunctive relief, and reasonable attorney's fees and costs.
See Cal. Lab. Code § 926(c).
What can a California employer protect instead of a non-compete?
Trade secrets and narrowly drawn confidentiality. The California Uniform Trade Secrets Act lets an employer enjoin the actual or threatened misappropriation of a trade secret (Civil Code section 3426.2), and that protection operates whether or not any restrictive covenant exists. But a confidentiality clause written so broadly that it bars the employee from working in their field is treated as a de facto non-compete and is void.
Because the Trade Secrets Act protects the information rather than the employment relationship, it is the most durable tool a California employer has for guarding competitively sensitive material .
“Actual or threatened misappropriation may be enjoined.”
The discipline a California employer must accept is precision. In Brown v. TGS Management Co., the Court of Appeal held that confidentiality provisions defined so expansively that they effectively barred the employee from his profession operated as a de facto non-compete and were void .
A trade-secret claim also comes with a procedural gate that shapes litigation: before taking discovery, the party alleging misappropriation must identify the trade secret with reasonable particularity .
Do not define confidential information so broadly that it sweeps in the employee's general skills, knowledge, and industry experience — a confidentiality clause that effectively prevents the worker from practicing their profession is a de facto non-compete and void under Brown v. TGS. Tie confidentiality to genuine, identifiable trade secrets, and rely on the Trade Secrets Act for enforcement.
Sources for this answer
Primary law
I.1 Cal. Civ. Code § 3426.2Civil Code section 3426.2(a), part of the California Uniform Trade Secrets Act, authorizes an injunction against actual or threatened misappropriation of a trade secret.
Actual or threatened misappropriation may be enjoined.
See Cal. Civ. Code § 3426.2(a).
Case law · 2020-11-12
I.2 Brown v. TGS Management Co., LLCBrown held that confidentiality provisions defined so broadly that they barred the employee from working in his field operated as a de facto non-compete and were void under section 16600.
Collectively, these overly restrictive provisions operate as a de facto noncompete provision; they plainly bar Brown in perpetuity from doing any work in the securities field, much less in his chosen profession of statistical arbitrage.
See Brown v. TGS Mgmt. Co., 57 Cal. App. 5th 303 (2020).
Primary law
I.3 Cal. Civ. Proc. Code § 2019.210Code of Civil Procedure section 2019.210 requires a party alleging trade-secret misappropriation to identify the trade secret with reasonable particularity before commencing discovery relating to it.
before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity
See Cal. Civ. Proc. Code § 2019.210.