California law generally prohibits most employee noncompete agreements. However, employers may still protect confidential information and trade secrets through properly drafted agreements and workplace policies. Below are answers to some common questions about noncompete agreements in California.
Frequently Asked Questions
What is a noncompete agreement?
A noncompete agreement is a contract that restricts an employee’s ability to work for a competitor or start a competing business after leaving a job.
Are noncompete agreements enforceable in California?
In most cases, no. California law generally voids contracts that restrain someone from engaging in a lawful profession, trade, or business.
Are there any exceptions?
Yes. Limited exceptions may apply in connection with:
- The sale of a business
- The dissolution of a partnership
- Certain sales or dissolutions involving ownership interests in a business entity
These exceptions are narrowly interpreted.
Can employers still protect confidential information and trade secrets?
Generally, yes. Employers may use:
- Confidentiality agreements
- Nondisclosure agreements (NDAs)
- Trade secret protections
- Policies safeguarding proprietary information
However, these agreements should not function as unlawful “de facto” noncompete agreements.
What is a “de facto” noncompete?
A “de facto” noncompete is a restriction that effectively prevents someone from working in their field, even if the agreement is not labeled as a noncompete.
Can out-of-state employers enforce noncompete agreements against California employees?
California employees are generally protected by California’s noncompete restrictions, even when the employer is located in another state.
Do employees owe duties to their employer while employed?
Yes. California employees generally owe a duty of loyalty during employment and may not improperly compete with their employer or misuse confidential information while still employed.
When should I contact an attorney?
Legal guidance may be helpful when drafting employment agreements, reviewing restrictive covenants, protecting trade secrets, or evaluating whether a noncompete provision is enforceable under California law.
If you have questions about noncompete agreements or trade secret protections in California, the attorneys at Chung & Reynolds are available to discuss your situation and help you understand your legal options. Please contact our office to schedule a consultation.
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