Non-Compete Agreements, also known as covenants not-to-compete, are common in the world of commerce. But unlike other states, Non-Compete Agreements are per se illegal in California and against public policy. (California Business and Professions Code Section 16600.) The legislature has thus deemed these agreements as to restrictive on a person’s right to find employment.

There are a few exceptions to this rule. Some examples of valid Non-Compete Agreements in California are where the agreement is reasonable and relates to when an owner is selling the goodwill in their business. (Business & Professions Code Section 16601), when there is a dissolution or disassociation of a partnership, (Business & Professions Code Section 16602), or where there is a dissolution of a limited liability company. (Business & Professions Code Section 16602.5)

As an employer in California, you must be aware of these rules and take precautions accordingly.

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