In the domain of commerce, a very common agreement is a non-compete agreement, also known as non-competition agreements or a covenant not to compete. But unlike other states, non-compete agreements are per se illegal in California and adjacent public policy. (California Business and Professions Code Section 16600.) The legislature has thus determined that these agreements as too prohibitive on somebodies 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 feasible and has to do with when an owner is selling the goodwill in their business, (Business & Professions Code Section 16601), when there is a break up or break-up 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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