Is a Non-Compete Agreement Enforceable in California in 2026?

Non-compete clauses sit inside the wider set of California labor laws governing hiring and separation. What follows is the statutory picture as it stands in 2026: what the ban covers, what the 2024 amendments added, which agreements still hold up, and what a worker handed a non-compete can do about it.

What section 16600 voids

Under Cal. Bus. & Prof. Code § 16600(a), “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” The provision is not limited to employment contracts and does not turn on whether the restraint looks reasonable in length or geography.

Subdivision (b)(1) tells courts to read the section broadly, in accordance with Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, and states that a restraint is void regardless of how narrowly it is drawn. That language closed off the argument that a modest restriction, six months, one county, one product line, falls outside the statute. The related question of which agreements escape the rule entirely is covered in the companion article on why a California non-compete is void, with three exceptions.

Because the restriction is void rather than merely unenforceable, a court does not rewrite it into something acceptable. California courts do not apply the “blue pencil” reform that some states use to shrink an overbroad covenant down to a permissible one.

Agreements signed outside California

The 2024 amendments answered the workaround employers had relied on for years: sign the worker in a state that permits non-competes, then argue that state’s law controls. Cal. Bus. & Prof. Code § 16600.5 makes a contract void under the chapter unenforceable in California “regardless of where and when the contract was signed,” and bars an employer from attempting to enforce one regardless of whether the employee signed it outside the state or worked outside the state.

A separate statute limits the forum-shopping half of the strategy. Cal. Labor Code § 925 bars an employer from requiring an employee who primarily resides and works in California to agree, as a condition of employment, to litigate California claims in another state or under another state’s law. The employee can void such a provision, and once voided the dispute is adjudicated in California under California law. The section carves out employees who were represented by their own counsel in negotiating the venue or choice-of-law term.

The notice employers owed by February 14, 2024

Cal. Bus. & Prof. Code § 16600.1 made it unlawful to include a void non-compete in an employment contract or to require an employee to sign one. It also imposed a one-time cleanup duty: employers had to notify current and former employees who were employed after January 1, 2022, and whose contracts contained a void clause, that the clause is void.

The statute set the deadline at February 14, 2024, and specified the form, an individualized written communication delivered to the employee’s last known mailing address and email address. A violation counts as an act of unfair competition under Business and Professions Code § 17200, which carries its own remedies.

Employers who missed the deadline did not thereby revive the clause. The notice requirement is a disclosure obligation layered on top of the ban, not a condition of it. A worker who never received a letter still holds a void non-compete.

What employers can still enforce

The ban runs to restraints on working, not to every post-employment obligation. Confidentiality agreements remain enforceable, and California’s Uniform Trade Secrets Act supplies an independent remedy for misappropriation. Cal. Civ. Code § 3426.1 defines a trade secret as information that derives independent economic value from not being generally known and is the subject of reasonable efforts to keep it secret.

The practical line is between the job and the information. An employer cannot stop a departing engineer from joining a competitor. It can pursue that engineer for downloading a customer database or a source-code repository on the way out.

Employers also retain ordinary contract remedies unrelated to competition: repayment terms for relocation costs or tuition, obligations to return equipment, and duties owed during employment such as the duty of loyalty. Agreements presented at separation deserve the same reading. The release and payment terms discussed in California severance pay and release agreements often sit in the same document as a restrictive covenant that Cal. Bus. & Prof. Code § 16600 has already voided.

The narrow exceptions that survive

Three statutory exceptions predate the 2024 amendments and survive them, and all three attach to ownership rather than employment. Under Cal. Bus. & Prof. Code § 16601, a person who sells the goodwill of a business, or disposes of all of an ownership interest in a business entity, may agree with the buyer to refrain from carrying on a similar business within a specified geographic area where the business was sold. Section 16602 covers partners in connection with dissolution or dissociation, and section 16602.5 covers members of a limited liability company on dissolution or termination of an interest.

Two other features of California employment law commonly get confused with the exceptions. Neither is one. The default employment relationship described in at-will employment in California lets either side end the relationship, but it does not authorize a restraint that operates after the relationship ends. And a fixed-term contract can require a person to work through the term without permitting a restraint once the term expires. ## Remedies when an employer uses a void non-compete Cal. Bus. & Prof. Code § 16600.5 makes a violation of the chapter a civil violation and gives an employee, former employee, or prospective employee a private action to enforce it. The available relief is injunctive relief, actual damages, or both, and a prevailing employee, former employee, or prospective employee is entitled to reasonable attorney’s fees and costs. The fee provision runs one direction; an employer that wins does not collect fees under the section. The prospective-employee category matters for hiring. A job applicant who refuses to sign a non-compete and loses the offer falls within the group the statute names, without ever having worked a day for the employer. Separate claims can attach to the same conduct. A worker fired for refusing to sign a void restraint is raising the kind of public-policy question described in wrongful termination in California, which follows its own filing path and deadlines. An unfair competition claim under Business and Professions Code § 17200 can also follow from a violation of Cal. Bus. & Prof. Code § 16600.1. ## Where the federal non-compete rule fits The Federal Trade Commission issued the Non-Compete Clause Rule, published in the Federal Register on May 7, 2024, which would have barred most non-competes nationwide. Litigation followed, and the agency posts the rule’s current status on its Noncompete Rule page. None of that changes the analysis in California. The state ban is broader than the federal rule would have been, since it reaches senior executives and applies without regard to compensation level, and it operates on its own terms under Cal. Bus. & Prof. Code § 16600.