Business owners across Southern California keep asking us to draft non-compete clauses for new hires. Here’s the problem: in California, that clause almost never holds up. Doesn’t matter if you’re in Los Angeles, Orange, San Bernardino, or Riverside County — if you’re trying to protect client lists, trade secrets, or company know-how after someone walks out the door, a non-compete isn’t your answer. Got one of these agreements already? Signed one as an employee? You need to understand what the law actually says before you count on it — or try to fight it.
Background: What California Law Says About Non-Competes
A “non-compete agreement” tries to stop a former employee from joining a competitor or starting their own competing business for some period after they leave. Most states will enforce these clauses, as long as they’re reasonable. California doesn’t play that game.
Under California Business and Professions Code Section 16600, almost any contract that restrains someone from working in their lawful profession, trade, or business is void. Full stop. The California Supreme Court made this crystal clear in Edwards v. Arthur Andersen LLP (2008), shutting down the softer “reasonableness” test other states still rely on. Protect your rights — we handle the rest.
The California Legislature strengthened this rule further with Assembly Bill 1076 and Senate Bill 699, both effective January 1, 2024. These laws, summarized by legal industry publications and discussed by the California Lawyers Association, require employers to notify current and former employees in writing, by February 14, 2024, that any non-compete clause in their contract is void. The law also created a private right of action, meaning an employee can sue an employer for using or even presenting a non-compete agreement, regardless of where the employee signed it or where the employer is based.
As of October 15, 2026, these rules remain in effect, and courts in Los Angeles County and across the state continue to decline to enforce non-compete clauses in employment contracts, with narrow exceptions tied to the sale of a business or dissolution of a partnership.
How This Affects Employers in Los Angeles, Orange, San Bernardino, and Riverside Counties
This rule affects nearly every business that hires employees in Southern California, from small shops in West Covina and Pomona to larger companies in Anaheim, Ontario, Riverside, and San Bernardino. If your employment contracts, offer letters, or employee handbooks contain a non-compete clause, that clause is generally unenforceable, and keeping it in your paperwork can expose your company to legal claims.
Employers in industries that depend on client relationships, such as sales, staffing, healthcare, finance, and technology, often feel this rule the hardest. Without an enforceable non-compete, a departing employee can generally go work for a direct competitor the next day. California law instead pushes employers toward other tools, such as:
- Non-disclosure agreements (NDAs) that protect confidential information, not the employee’s right to work;
- Trade secret protections under the California Uniform Trade Secrets Act;
- Non-solicitation clauses, which must also be drafted carefully, since broad client or employee non-solicitation terms can also be challenged; and
- Reasonable confidentiality and invention-assignment agreements.
Companies that are growing, merging, or preparing for public offerings also need to review legacy contracts for void clauses, since these issues can surface during due diligence. Businesses navigating these broader corporate questions may want to review resources on public company and Nasdaq uplisting matters when non-compete issues intersect with securities compliance.
What You Should Do Now
California employers should take the following steps as soon as possible:
- Audit existing contracts. Review employment agreements, offer letters, and handbooks for non-compete language, including broad non-solicitation clauses that may function like a non-compete.
- Send required notices. If your company has not already notified affected current and former employees about void non-compete clauses, as required by AB 1076, do this promptly in writing.
- Replace with lawful protections. Consider narrowly drafted NDAs, trade secret policies, and invention-assignment agreements that comply with California law.
- Train HR and managers. Make sure staff understand that non-compete clauses cannot be presented to new hires or used to threaten former employees.
- Review vendor and partner contracts too. Non-compete language sometimes appears in independent contractor agreements, franchise agreements, and business sale documents, which have different rules than employment contracts.
Employees who are being asked to sign a non-compete, or who are being threatened with one after leaving a job, should also know that the clause is likely void and that they may have a claim if an employer tries to enforce it.
How TEZ Law Firm Can Help
TEZ Law Firm works with Southern California businesses to review employment agreements, draft lawful confidentiality and trade secret protections, and respond to disputes involving former employees or competitors. The firm also advises on related contract, litigation, and intellectual property matters that often arise alongside non-compete questions, including disputes handled through business litigation services and trade secret or trademark and intellectual property protection. Attorney JJ Zhang (California Bar #326666) founded the firm, which serves clients from offices in West Covina, City of Industry, and Newport Beach.
Frequently Asked Questions
Are non-compete agreements ever enforceable in California?
Rarely. California generally voids non-compete clauses in employment contracts. Narrow exceptions can apply to the sale of a business, dissolution of a partnership, or dissolution of a limited liability company, where a seller agrees not to compete with the buyer within a defined area.
Can my employer require me to sign a non-compete even if I work remotely for a California-based company?
California’s law can still apply, depending on the facts. Under AB 1076 and SB 699, California courts and agencies have taken the position that out-of-state employers cannot use non-compete clauses against California-based employees, even if the contract was signed elsewhere.
What should I do if my employer sends me a cease-and-desist letter based on a non-compete?
Do not ignore the letter, but understand that most non-compete clauses are not enforceable in California. You may want to have an attorney review the letter and your contract before responding.
Can employers use non-solicitation or confidentiality agreements instead?
Yes, within limits. Reasonable confidentiality agreements and trade secret protections are generally allowed, but overly broad non-solicitation clauses that stop an employee from working with former clients or coworkers can also be challenged under California law.
What penalties can an employer face for using a void non-compete clause?
Under current California law, employees and former employees may bring a private lawsuit against an employer that uses or attempts to enforce a void non-compete clause, and may recover actual damages, attorney’s fees, and costs.
If your business in West Covina, Los Angeles, Anaheim, San Bernardino, Riverside, Ontario, or Pomona needs help reviewing employment contracts or responding to a non-compete dispute, you can schedule a consultation with TEZ Law Firm through our contact page to discuss your situation and next steps.
This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Laws and agency practices change; contact TEZ Law Firm (West Covina, California) at 626-678-8677 or [email protected] about your situation. Prior results do not guarantee a similar outcome.