California Business and Professions Code Section 16600 states: "Except as provided in this chapter, every contract by which anyone is restricted from engaging in a lawful profession, trade or business of any kind is to that extent void."
There are very few exceptions to the rule that noncompete clauses or contracts are void in California. They are contract between equity business owners in which they agree to not compete if one owner sells his/her equity to the other. The other exception is if a business is sold to a new owner(s). In that situation, the buyer can require the seller to refrain from competing.
Noncompete clauses or contracts should not be confused with nondisclosure or nonsolicitation agreements. It is not unlawful, and therefore, contracts or terms of contracts are upheld in California if they require an employee to refrain from disclosing trade secrets, including customer lists, etc. and/or from soliciting the services of current employees of the employer.
Although California law is crystal clear in that noncompete agreements of employees (unless an equity shareholder or seller of a business) are void, many employers still use them. If you have questions about noncompete terms or agreements or have one and want to know if it is unlawful and therefore void, call Law Office of Kristine S. Karila to discuss. Ms. Karila has been practicing employment and labor law in California for 23 years. (949) 481-6909.
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