What Are Non-Compete Disputes?
Non-compete disputes arise when an employer attempts to restrict a former employee's ability to work for a competitor or start a competing business. California has one of the strongest employee mobility protections in the nation — Business and Professions Code section 16600 declares 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. This means that, with very narrow exceptions, non-compete agreements are unenforceable in California.
If you are facing a non-compete dispute in San Jose, San Francisco, Oakland, Silicon Valley, or anywhere in Santa Clara County, the attorneys at RV Litigation Group PC can help. We defend employees whose former employers are attempting to restrict their career mobility, and we advise employers on the limited circumstances in which restrictive covenants may be enforceable in California.
Despite California's clear prohibition on non-competes, disputes in this area remain common — particularly in the technology sector, where employers based in other states may attempt to enforce non-compete agreements signed in jurisdictions where such agreements are valid. California courts have repeatedly rejected these efforts, holding that California's public policy in favor of employee mobility overrides contractual choice-of-law provisions.
In 2023, California further strengthened its prohibition by enacting AB 1076 and SB 699, which codified existing case law and imposed penalties on employers who attempt to enforce void non-compete agreements. At RV Litigation Group PC, we stay current on these developments and advocate aggressively for our clients' rights.
What the Law Says
Business & Professions Code 16600 — Restraint of Trade Void
""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."" — California Business & Professions Code Section 16600
Section 16600 represents California's fundamental public policy in favor of open competition and employee mobility. The statute invalidates any contractual provision that restricts a person's right to engage in their chosen profession — regardless of how narrow or reasonable the restriction may be. Unlike many other states that apply a "reasonableness" test to evaluate non-competes, California applies a bright-line rule: non-compete agreements are void, period. The only statutory exceptions involve the sale of a business (Section 16601), dissolution of a partnership (Section 16602), and dissolution of an LLC (Section 16602.5).
Business & Professions Code 16600.5 — Post-Employment Non-Competes Void
""(a) Any contract that is void under this chapter is unenforceable regardless of where and when the contract was signed. (b) An employer or former employer shall not attempt to enforce a contract that is void under this chapter regardless of whether the contract was signed and the employment was maintained outside of California."" — California Business & Professions Code Section 16600.5 (eff. 2024)
Section 16600.5, enacted as part of SB 699, makes explicit what California courts had already held: non-compete agreements are void in California regardless of where they were signed. This statute targets the common practice of out-of-state employers attempting to enforce non-competes against employees who relocate to California. It also provides that any attempt to enforce a void non-compete is independently actionable, meaning the employee can seek damages and injunctive relief.
Real-World Examples
These scenarios illustrate how non-compete disputes commonly arise in the Bay Area:
A software engineer at a Silicon Valley company signed a two-year non-compete agreement as a condition of employment. When the engineer accepts a position at a competing company, the former employer sends a cease-and-desist letter threatening litigation. Under B&P 16600, the non-compete is void and unenforceable in California. The engineer's attorney responds with a letter citing Section 16600 and 16600.5, and the former employer backs down. If the former employer had filed suit, the engineer could seek attorney fees and damages for wrongful enforcement.
An executive relocates from Texas to San Jose to join a Bay Area tech company. Her former Texas employer attempts to enforce a non-compete agreement governed by Texas law, where such agreements are enforceable if reasonable. The executive's attorney files a declaratory judgment action in Santa Clara County, arguing that California law applies and the non-compete is void under Section 16600. California courts consistently hold that California's public policy overrides out-of-state choice-of-law provisions in non-compete agreements.
A San Francisco entrepreneur sells her marketing agency for $2 million and signs a non-compete agreement as part of the sale. Two years later, she opens a new marketing agency in the same market. The buyer sues to enforce the non-compete. Under B&P 16601, non-compete agreements signed in connection with the sale of a business are enforceable in California if they are limited to the geographic area and scope of the business sold. This is one of the narrow exceptions to California's general ban.
A sales representative in Oakland leaves her employer and begins contacting her former clients at her new company. The former employer claims the representative violated a customer non-solicitation agreement. California courts have generally held that customer non-solicitation agreements are a form of non-compete and are therefore void under Section 16600, because they restrict the employee's ability to practice her profession. However, the former employer may have claims under trade secret law if the customer list qualifies as a trade secret.
What's at Stake
Non-compete disputes carry significant consequences for both employers and employees. Understanding the legal landscape is critical to protecting your rights.
| Scenario | Legal Framework | Likely Outcome | Remedies |
|---|---|---|---|
| Standard Non-Compete | B&P 16600 — void in California | Unenforceable; employee free to compete | Employee: attorney fees, damages for wrongful enforcement |
| Out-of-State Agreement | B&P 16600.5 — void regardless of where signed | California law applies; non-compete void | Employee: declaratory relief, attorney fees, damages |
| Business Sale Exception | B&P 16601 — enforceable if reasonable | Enforceable if limited to scope/geography of business sold | Buyer: injunction, damages for breach |
| Customer Non-Solicitation | B&P 16600 — generally void as form of non-compete | Usually unenforceable; but trade secret claims may apply | Depends on whether customer list is a trade secret |
| Non-Disclosure Agreement | Not a non-compete; generally enforceable | Enforceable if limited to protecting trade secrets | Injunction, damages for breach |
Employer penalties: Under the 2024 amendments, employers who attempt to enforce void non-compete agreements may face civil penalties and be required to pay the employee's attorney fees and costs. Additionally, an employer who terminates or threatens to terminate an employee for refusing to sign a non-compete may face claims for wrongful termination in violation of public policy. These consequences make it essential for employers to understand and comply with California's prohibition.
How We Help
At RV Litigation Group PC, we handle non-compete disputes for both employees and employers. Our approach is pragmatic, aggressive, and grounded in California's strong public policy favoring employee mobility.
1. Non-Compete Defense
We defend employees who receive cease-and-desist letters or face lawsuits from former employers seeking to enforce non-compete agreements. We respond to demand letters with detailed legal analysis demonstrating the agreement's invalidity under Section 16600. When litigation is filed, we move to dismiss or seek summary judgment on the grounds that the non-compete is void as a matter of law. We also pursue affirmative claims for attorney fees and damages for wrongful enforcement.
2. Declaratory Judgment Actions
When an employee needs legal certainty before accepting a new position, we file declaratory judgment actions seeking a court determination that the non-compete agreement is void and unenforceable. This proactive approach allows the employee to move forward with confidence and puts the former employer on notice that any attempt at enforcement will be met with vigorous opposition.
3. Trade Secret Carve-Out Analysis
While non-competes are void in California, employers may have legitimate claims under trade secret law. We analyze each situation to determine whether the employer's concerns relate to genuine trade secrets or are merely a pretext for restricting competition. When trade secret claims have merit, we help our clients navigate the boundaries between lawful competition and trade secret misappropriation.
4. Business Sale Non-Compete Litigation
We handle disputes involving non-compete agreements signed in connection with business sales — the one major exception to California's ban. We advise sellers on the enforceability of proposed restrictions and represent buyers seeking to enforce valid business sale non-competes. We also challenge overbroad restrictions that exceed the scope of the business sold.
5. Employer Compliance Counseling
We advise California employers on compliant alternatives to non-compete agreements, including well-drafted non-disclosure agreements, invention assignment agreements, and non-solicitation provisions that are limited to protecting genuine trade secrets. We help employers understand the line between lawful protection of proprietary information and unlawful restriction of employee mobility.
6. Cross-Border Enforcement Issues
For employees and employers involved in multi-state disputes, we navigate the complex choice-of-law and jurisdictional issues that arise when non-compete agreements cross state lines. We advocate for the application of California law and leverage Sections 16600 and 16600.5 to invalidate out-of-state non-competes that restrict our clients' ability to work in California.
Frequently Asked Questions
No. Under Business and Professions Code 16600, non-compete agreements are generally void and unenforceable in California. The only statutory exceptions are non-competes signed in connection with the sale of a business (Section 16601), dissolution of a partnership (Section 16602), or dissolution of an LLC (Section 16602.5).
Under Section 16600.5 (effective 2024), non-compete agreements are void in California regardless of where they were signed. Even if you signed a non-compete in a state where such agreements are enforceable, California courts will not enforce it against you if you are working or seeking to work in California.
It depends. California courts have generally held that broad customer non-solicitation agreements are a form of non-compete and are void under Section 16600. However, narrowly tailored non-solicitation provisions that protect genuine trade secrets — such as confidential customer information — may be enforceable to the extent they overlap with trade secret protections under CUTSA.
Terminating an employee for refusing to sign a non-compete agreement may constitute wrongful termination in violation of public policy, since Section 16600 represents a fundamental California public policy. Employees who are terminated under these circumstances may have claims for lost wages, emotional distress, and punitive damages.
The statutory exceptions are narrow: (1) non-competes in connection with the sale of a business goodwill or ownership interest (B&P 16601), (2) non-competes upon dissolution of a partnership (B&P 16602), and (3) non-competes upon dissolution of an LLC (B&P 16602.5). Outside these exceptions, non-compete agreements are void.
