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California Non-Compete Agreement Template

California treats employee non-competes as void, no matter where or when they were signed, and employers can be sued for trying to enforce one. That makes this template most useful in California for the exceptions: selling a business's goodwill or your entire ownership stake, or a partner or LLC member leaving or dissolving the company.

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California rules to know

  • Employee non-competes are void

    Any contract that restrains someone from engaging in a lawful profession, trade or business is void, unless a statutory exception applies. Courts have extended this to most employee non-solicitation-of-customers clauses.

    Cal. Bus. & Prof. Code § 16600; Edwards v. Arthur Andersen LLP (2008)

  • Out-of-state non-competes don't work either

    A void non-compete is unenforceable regardless of where or when it was signed, and an employer may not try to enforce one. Employees can sue for injunctive relief, damages and attorney's fees.

    Cal. Bus. & Prof. Code § 16600.5 (SB 699, eff. Jan. 1, 2024)

  • Sale-of-business and owner exits are the exceptions

    A person who sells the goodwill of a business, or all of their ownership interest, can agree not to compete within a specified area. Similar exceptions cover partners and LLC members on dissolution or departure.

    Cal. Bus. & Prof. Code §§ 16601–16602.5

  • California employees keep California law

    An employer can't require an employee who primarily lives and works in California to agree to another state's law or courts as a condition of employment, unless the employee was individually represented by a lawyer in negotiating it.

    Cal. Lab. Code § 925

Last updated 2026-10-05

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What a non-compete agreement covers

  • Restricted activities and competitors
  • Duration and geographic scope
  • Non-solicitation of customers and employees
  • Consideration given for the restriction
  • Remedies and reformation
  • Governing law and venue

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Frequently asked questions

Can I make a California employee agree to another state's law for their non-compete?
Generally no. An employer can't require an employee who primarily lives and works in California to accept another state's law or courts as a condition of employment, unless the employee was individually represented by a lawyer in negotiating that term. A void non-compete also stays unenforceable regardless of where it was signed.
What happens if a California employer tries to enforce a void non-compete?
California law says an employer may not try to enforce a void non-compete. The affected employee can sue for injunctive relief, damages and attorney's fees, so threatening a former employee over an ordinary employee non-compete can create real financial exposure for a small business.
Can I stop a departing California employee from soliciting my customers?
Usually not by contract. California courts have extended the rule against restraints on trade to most employee non-solicitation-of-customers clauses, so these are generally treated much like non-competes. Restrictions hold up mainly in sale-of-business and owner-exit situations, where a seller or departing owner agrees not to compete within a specified area.
Are non-competes enforceable?
It depends heavily on the state. A few states ban most employee non-competes outright, others cap them by salary, duration or industry, and many enforce only restrictions that are reasonable in time, area and scope.
What's the difference between a non-compete and a non-solicit?
A non-compete stops someone working for a competitor or starting a competing business. A non-solicit only stops them from poaching your customers or staff. Non-solicits are enforceable in more places, but not everywhere.
Can I use a non-compete when selling my business?
Usually yes. Sale-of-business non-competes are treated much more favourably than employee ones, even in states that otherwise ban non-competes.

Non-Compete Agreement in other states

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