California Non-Compete Laws (2026): Are Non-Competes Enforceable?

California treats almost every employee non-compete as void. Business and Professions Code § 16600 provides 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," and since January 1, 2024 the statute says that rule voids an employment non-compete "no matter how narrowly tailored" unless it fits one of the chapter's exceptions. Those exceptions cover people selling a business or leaving a partnership or LLC, not ordinary employees.

California goes further than voiding the clause. It is unlawful for an employer to put a non-compete in an employment contract or to require you to sign one, a void non-compete cannot be enforced no matter where it was signed, and a worker can sue an employer that tries. For how other states handle these agreements, see our guide to non-compete laws by state.

Information last verified on 2026-10-06. This article has not been reviewed by a licensed lawyer.

Jurisdiction scope: This article covers California law on employee non-compete agreements under Business and Professions Code §§ 16600, 16600.1, 16600.5, 16601, 16602, 16602.5 and 16608 and Labor Code §§ 925 and 926, with a short note on the federal FTC rule. It does not cover trade-secret claims (see California trade secret laws) or the pay terms of a separation agreement (see California severance pay laws).

Are non-competes enforceable in California?

No, for employees, unless the agreement fits a statutory exception. Section 16600(a) voids any contract that restrains someone from a lawful profession, trade or business "to that extent." The rule applies whether the clause is broad or narrow.

Section 16600(b)(1) tells courts to read the section broadly "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." AB 1076 (Stats. 2023, ch. 828) added that language effective January 1, 2024 to codify the California Supreme Court's 2008 decision in Edwards v. Arthur Andersen LLP, 44 Cal.4th 937.

Two more points from the statute text matter to employees:

• No salary or job-title threshold. Sections 16600 through 16608 set no income or classification threshold, so the rule is not limited to lower-paid workers.
• Not just your own contract. Section 16600(c) states that the rule is not limited to contracts where the person being restrained is a party.

What California employers are not allowed to do

Two laws that took effect on January 1, 2024 turned the old "void" rule into a set of duties for employers.

"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." Cal. Bus. & Prof. Code § 16600.1(a)

Section 16600.1(b) also required employers to send an individualized written notice, to the last known mailing address and email address, telling workers that a void non-compete clause is void. The deadline was February 14, 2024, and it covered current employees and former employees who were employed after January 1, 2022. Under § 16600.1(c), a violation of § 16600.1 is unfair competition under the Unfair Competition Law, Bus. & Prof. Code § 17200.

"Any contract that is void under this chapter is unenforceable regardless of where and when the contract was signed." Cal. Bus. & Prof. Code § 16600.5(a)

Section 16600.5 adds that an employer shall not attempt to enforce a void contract regardless of whether it was signed, and the employment maintained, outside California. Under § 16600.5(d), an employer that enters into a void non-compete, or attempts to enforce one, commits a civil violation.

What a worker can do if an employer tries to enforce one

Section 16600.5(e) gives an employee, former employee or prospective employee a private right of action for injunctive relief, actual damages, or both. A worker who prevails recovers reasonable attorney's fees and costs.

The statute names no state agency to take these complaints. Enforcement runs through private lawsuits under § 16600.5(e) and, for a § 16600.1 violation, the Unfair Competition Law. Because the outcome of any dispute depends on the exact clause and facts, a lawyer licensed in California can review a specific agreement or cease-and-desist letter.

The exceptions: selling a business or leaving a partnership or LLC

California's exceptions all involve owners, not employees in their capacity as employees.

If a non-compete does not fit one of these exceptions, § 16600.1(a) makes it unlawful to include it in an employment contract at all.

Signed in another state? Choice-of-law and forum clauses

A clause saying another state's law applies, or that disputes must be heard elsewhere, does not save a non-compete that California law voids. Section 16600.5(a) makes a void contract unenforceable "regardless of where and when the contract was signed," and the same section bars an employer from attempting to enforce it even if the contract was signed and the employment maintained outside California.

Labor Code § 925 adds a separate protection for people who primarily reside and work in California:

• An employer may not require such an employee, as a condition of employment, to adjudicate outside California a claim arising in California or to give up the substantive protection of California law.
• A provision that does so is voidable by the employee, and the dispute is then decided in California under California law.
• A court may award the employee attorney's fees.
• The rule applies to contracts entered into, modified or extended on or after January 1, 2017.
• It does not apply when the employee was individually represented by a lawyer in negotiating the forum or choice-of-law terms.

Does it matter if you were fired or quit?

No. Sections 16600 through 16600.5 draw no line between quitting and being fired or laid off; a void non-compete is void either way. The stay-or-pay law discussed below, which applies to contracts entered into on or after January 1, 2027, does draw that line for one kind of contract.

Can a court narrow an overbroad non-compete?

California's statute does not ask a court to rewrite an employee non-compete into a reasonable one. Section 16600 makes the restraint void "to that extent," and § 16600(b)(1) says narrow tailoring does not save an employment non-compete that lacks an exception. The text of §§ 16600 through 16600.5 contains no provision for a court to trim or reform the clause.

Stay-or-pay and training repayment clauses (AB 692, applies from 2027)

AB 692 (Stats. 2025, ch. 703), approved by the Governor on October 13, 2025, added Business and Professions Code § 16608 and Labor Code § 926. These target "stay-or-pay" terms rather than non-competes. AB 1697 (Stats. 2026, ch. 889), an urgency law effective September 30, 2026, delayed them: they now apply only to contracts entered into on or after January 1, 2027, and AB 1697 declares moot any pending claim for conduct between January 1, 2026 and September 30, 2026. Contracts entered into before January 1, 2027 are not reached by these sections.

For a covered contract, it is unlawful to include in an employment contract, or to require a worker to sign as a condition of employment, a term that does any of the following:

• requires the worker to pay a debt to the employer, a training provider or a debt collector if the worker's employment ends;
• authorizes the employer or another party to resume collecting a debt when employment ends; or
• imposes any "penalty, fee, or cost" on the worker for separating from employment.

A worker, or a representative acting for the worker and others similarly situated, can sue under Labor Code § 926(c) for actual damages or $5,000 per worker, whichever is greater, plus injunctive relief and attorney's fees and costs.

Section 16608, as amended by AB 1697, lists exceptions, including:

• government loan-repayment programs;
• recruitment and retention bonuses under a government-grant-funded program, if repayment follows the grant terms;
• tuition contracts for a transferable credential that meet the section's five conditions, one of which is that the contract may not require repayment if the worker is terminated, except for misconduct;
• state-approved apprenticeship programs;
• repayment of a discretionary or unearned up-front bonus, but only under a separate agreement that gives notice of the right to consult a lawyer and at least five business days to do so, charges no interest, prorates the repayment, uses a retention period of no more than two years, offers the option to defer receiving the bonus, and requires repayment only when the worker leaves by choice or is separated for misconduct;
• agreements to lease, finance or buy residential property;
• certain affiliation payments between securities broker-dealers, insurance producers or investment advisers and their registered or licensed agents, under listed conditions; and
• repayment of advanced paid time off beyond what the worker had accrued, on voluntary separation, capped at 40 hours and interest-free.

Non-solicitation and confidentiality agreements

Section 16600 voids "any" contract that restrains a lawful profession, trade or business, to that extent, but the text of §§ 16600 through 16600.5 does not separately address customer non-solicitation clauses, no-hire clauses or confidentiality agreements. In Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, the case § 16600(b)(1) tells courts to follow, the California Supreme Court held invalid an agreement that barred a departing accountant from working for, or soliciting, clients of his former office, because it restrained his ability to practice his profession. Edwards expressly did not address the so-called trade secret exception to § 16600 or the clause barring him from recruiting the firm's employees; the use of trade secrets is governed separately (see California trade secret laws). How § 16600 applies to a particular no-hire or confidentiality clause depends on its terms.

Are any professions treated differently?

We found no profession-specific non-compete rule in the Business and Professions Code chapter that holds §§ 16600 through 16608. Outside that chapter, SB 351 (Stats. 2025, ch. 409) added Health and Safety Code § 1191(d), which voids clauses in management or asset-sale contracts between a physician or dental practice and a private equity group or hedge fund that bar a provider from competing with the practice after leaving it. We did not review every other California code for this page.

Non-competes vs. trade secret protection

Protecting confidential business information is a separate body of law from § 16600. For that, see California trade secret laws.

The federal FTC non-compete rule

The FTC's nationwide non-compete rule, published May 7, 2024, never took effect: on August 20, 2024 the U.S. District Court for the Northern District of Texas set it aside in Ryan LLC v. FTC, the FTC voted on September 5, 2025 to drop its appeals, and the FTC removed the rule from the Code of Federal Regulations on February 12, 2026. The FTC still acts case by case, for example approving a final order against pest-control company Rollins on June 22, 2026. Background: the FTC non-compete ban struck down in Ryan v. FTC and our non-compete laws by state guide.

Recent changes to California non-compete law

Related

• Non-compete laws by state
• California trade secret laws
• California severance pay laws
• California at-will employment laws
• FTC non-compete ban struck down in Ryan v. FTC

Disclaimer: This article provides general legal information about California non-compete law, including Business and Professions Code §§ 16600 through 16608 and Labor Code §§ 925 and 926, and related federal developments. It is not legal advice and does not create an attorney-client relationship. The information was verified on 2026-10-06. For advice about your own agreement, contact a legal aid office or a lawyer licensed in California.

Last updated: 2026-10-06.

Frequently Asked Questions

Are non-competes enforceable in California?

Generally no. Cal. Bus. & Prof. Code § 16600 voids employee non-competes that do not fit a statutory exception, no matter how narrowly tailored; the exceptions in §§ 16601, 16602 and 16602.5 cover selling a business or leaving a partnership or LLC.

Can my employer make me sign a non-compete in California?

Section 16600.1(a) makes it unlawful to include a non-compete clause in an employment contract, or to require an employee to enter one, unless it satisfies a statutory exception. A violation is unfair competition under Bus. & Prof. Code § 17200.

I signed a non-compete in another state and moved to California. Does California law apply?

Section 16600.5 says a contract void under California's chapter is unenforceable regardless of where and when it was signed, and bars an employer from attempting to enforce it even if it was signed and the employment maintained outside California. How that plays out for a specific agreement is a question for a California lawyer.

Can I sue an employer for trying to enforce a non-compete in California?

Section 16600.5(e) lets an employee, former employee or prospective employee sue for injunctive relief, actual damages, or both, and a worker who prevails recovers reasonable attorney's fees and costs.

Did my California employer have to tell me my non-compete is void?

Section 16600.1(b) required employers to send individualized written notice by February 14, 2024 to current employees and to former employees employed after January 1, 2022 telling them that a void non-compete clause is void.

Is a non-compete allowed when selling a business in California?

Yes, within limits. Under § 16601, a seller of a business's goodwill, all of an ownership interest, or all or substantially all operating assets may agree not to carry on a similar business in a specified area where the business operated, as long as the buyer carries on a like business there.

Can a California employer make me repay training costs if I quit?

For contracts entered into on or after January 1, 2027 (the date as amended by AB 1697 in 2026), Bus. & Prof. Code § 16608 and Lab. Code § 926 (AB 692) make most terms requiring repayment, or any penalty, fee or cost, on leaving a job unlawful, with listed exceptions such as qualifying transferable-credential tuition contracts.

Does the FTC non-compete ban apply in California?

No federal ban is in force. A federal court in Texas set the FTC rule aside on August 20, 2024, and the FTC removed it from the Code of Federal Regulations on February 12, 2026; California's own § 16600 already voids most employee non-competes.