Non-Compete Agreements and California's Ban Under SB 699
California has banned non-compete agreements for over a century. Business and Professions Code section 16600 says it plainly: every contract that restrains anyone from engaging in a lawful profession, trade, or business is void. That’s not a gray area. It’s one of the strongest employee mobility protections in the country. But employers kept trying to enforce non-competes anyway, especially against workers who moved to California from other states. SB 699 and AB 1076, both signed into law in 2023 and effective January 1, 2024, shut that door.
If you work in Orange County’s tech corridor, biotech cluster, or along the 405 from Irvine to Costa Mesa, you need to understand what these employment law changes mean for your career. I’ve advised workers across Orange County who were told they couldn’t leave their employer, couldn’t join a competitor, or couldn’t start their own business because of a non-compete they signed years ago in another state. In almost every case, that non-compete is unenforceable in California.
Why Has California Always Banned Non-Competes?
Business and Professions Code section 16600 has existed since 1872. The statute reflects California’s public policy that workers should be free to change jobs, start businesses, and pursue their careers without restrictions imposed by former employers. This policy helped fuel Silicon Valley and California’s tech boom. Workers could move between companies, bring their skills and knowledge, and innovate without fear of being sued.
The California Supreme Court confirmed the breadth of section 16600 in Edwards v. Arthur Andersen LLP (2008). The court rejected any “narrow restraint” exception, holding that non-compete agreements are void even if they impose limited restrictions on an employee’s ability to work. Before Edwards, some employers argued that “reasonable” non-competes should be enforced in California. That argument is dead.
The Orange County angle
Orange County’s business ecosystem benefits directly from this policy. Tech and biotech companies clustered around Irvine, Newport Beach, and the Irvine Spectrum area compete hard for talent. Workers at companies along Von Karman Avenue and in the Irvine Business Complex move between employers regularly. Biotech researchers at firms near UC Irvine’s research park bring specialized expertise that shouldn’t be locked up by a former employer’s non-compete clause. Section 16600 ensures that mobility continues.
According to the Bureau of Labor Statistics, Orange County had approximately 1.6 million nonfarm jobs as of December 2024, with significant concentrations in professional and business services, healthcare, and technology. Those workers are protected by section 16600, whether their employers acknowledge it or not.
What Did SB 699 Change?
SB 699, authored by Senator Caballero, became effective January 1, 2024. It addresses a specific problem: employers based in other states who tried to enforce non-compete agreements against employees who moved to California or who competed with the employer from California.
Voiding out-of-state non-competes
Before SB 699, some employers claimed that a non-compete signed in Texas, New York, or Florida should be governed by that state’s law even after the employee moved to California. SB 699 makes clear that any non-compete agreement is void and unenforceable in California regardless of where or when it was signed. Business and Professions Code section 16600.5(a) states that any contract that is void under section 16600 is unenforceable regardless of where and when the contract was signed.
This matters for Orange County because the region attracts workers from across the country. Engineers moving from Austin, finance professionals from New York, and healthcare administrators from states that enforce non-competes arrive in OC with agreements that their former employers may claim are still binding. Under SB 699, they’re not.
Employer notification requirement
SB 699 requires employers to notify current employees if the employer had previously required them to sign a non-compete that is now void under California law. Business and Professions Code section 16600.5(b) mandates that employers provide individualized written notice to current employees (and former employees who were employed after January 1, 2022) that any non-compete clause in their agreement is void.
The notification had to be sent by February 14, 2024. If your employer never sent you this notice and you signed a non-compete at any point during your employment, your employer violated SB 699.
Check your email (personal and work) for a notice from your employer dated around January or February 2024 about your non-compete being void. If you never received one, write down that fact and save it. You may have a claim.
Penalties for enforcement
An employer that tries to enforce a void non-compete agreement against a California worker faces liability. Under SB 699, the affected employee can bring a civil action and recover damages, attorney’s fees, and costs. The employer may also face injunctive relief ordering it to stop enforcing the agreement.
What About AB 1076?
AB 1076, signed by Governor Newsom the same day as SB 699, reinforced the ban from a different angle. AB 1076 added Labor Code section 16600.5 provisions confirming that non-compete clauses are void under California law, that employers cannot require employees to agree to non-competes, and that violations give rise to a civil cause of action.
Together, SB 699 and AB 1076 create a belt-and-suspenders protection for California workers. Even if one statute’s provisions were challenged, the other would provide the same protections.
Are Any Non-Compete Agreements Legal in California?
Yes, but the exceptions are narrow and don’t apply to typical employment relationships.
Sale of a business
Under Business and Professions Code section 16601, a person who sells the goodwill of a business or sells an ownership interest in a company can agree not to compete with the buyer within a specified geographic area and time period. This exception exists because the buyer is paying for the value of the business, which includes its customer relationships and market position. Allowing the seller to immediately compete would undermine the sale.
If you sell your company to an acquirer based in the Irvine Business Complex and agree not to open a competing business in Orange County for three years, that restriction is likely enforceable. But this exception applies only to the sale context, not to ordinary employment.
Dissolution of a partnership or LLC
Business and Professions Code sections 16602 and 16602.5 allow partners in a partnership or members of an LLC to agree that, upon dissolution, they won’t compete within a defined geographic area where the partnership or LLC conducted business. Again, this exception is limited to the dissolution context.
What doesn’t qualify
No other exception exists. An employer cannot enforce a non-compete against a regular employee, even if the employee is an executive, a salesperson with key accounts, or an engineer with trade secrets. The employee’s role, seniority, or access to confidential information doesn’t matter. Section 16600 voids the agreement regardless.
Employers sometimes try to disguise non-competes as other types of restrictions. Non-solicitation agreements (prohibiting you from contacting former clients or coworkers) are also problematic under California law. The California Court of Appeal in AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) found that certain customer non-solicitation provisions were unenforceable restraints of trade under section 16600. Broad non-solicitation clauses that effectively prevent you from competing are treated the same as non-competes.
What If Your Employer Is Threatening to Enforce a Non-Compete?
This happens more often than it should, particularly in industries where Orange County employers compete with companies in states that enforce non-competes.
Don’t panic. Don’t quit.
A threat letter from your former employer’s attorney doesn’t mean you’ve done anything wrong. If you’re working in California, your non-compete is almost certainly void. Don’t make career decisions based on a threatening letter. Get legal advice.
Save everything
Keep the threatening letter or email. Save any communications from your former employer about the non-compete. If you received the SB 699 notification voiding the non-compete, save that too. If you didn’t receive the notification, document that fact.
Get an attorney involved early
A response letter from your attorney citing Business and Professions Code section 16600, SB 699, and AB 1076 usually ends the matter. Most employers drop the enforcement attempt once they see California law cited. If they don’t, you may have a claim for damages and attorney’s fees under the new statutes.
At Mister Wolf P.C., our Orange County employment lawyers have sent cease-and-desist letters on behalf of Orange County workers whose former employers tried to enforce void non-competes. In most cases, the former employer backs down once it realizes the legal exposure. In the cases where they didn’t, we filed suit and recovered fees and damages for our clients.
How Do Non-Competes Interact with Trade Secret Law?
Employers sometimes conflate non-compete restrictions with trade secret protections. They’re different legal concepts, and understanding the distinction matters.
Trade secrets are still protected
Even though California voids non-competes, employers can still protect their trade secrets under the California Uniform Trade Secrets Act (Civil Code section 3426 et seq.) and the federal Defend Trade Secrets Act. A trade secret is information that derives economic value from being secret and that the company takes reasonable steps to keep confidential.
If you leave your employer and take confidential customer lists, proprietary source code, or secret manufacturing processes with you, your former employer can sue you for trade secret misappropriation. That lawsuit has nothing to do with a non-compete. It’s a separate cause of action.
The line between knowledge and trade secrets
Your general skills, experience, industry knowledge, and professional relationships are not trade secrets. You can use everything you learned on the job in your next position. The California Supreme Court’s ruling in Morlife, Inc. v. Perry (1997) confirmed that an employee’s general knowledge and skills belong to the employee, not the employer.
Orange County workers in biotech, medical devices, and software development worry about this line a lot. If you developed expertise in a particular coding language, scientific methodology, or regulatory process while working for one company, you can use that expertise at your next job. What you can’t do is take your former employer’s proprietary formulas, customer databases, or confidential pricing models.
Practical steps when leaving a job
Before you give notice, review what you have access to and what you plan to bring with you (the answer should be nothing proprietary). Don’t download company files to personal devices. Don’t email company documents to yourself. Don’t copy customer contact lists. Leave with your skills, your experience, and nothing that belongs to the employer.
Clean out your personal items and personal files before your last day. Return all company property. Document that you returned everything. This protects you from later claims that you took trade secrets when you left.
What Industries in Orange County Are Most Affected?
Technology
The Irvine Spectrum area, Aliso Viejo, and Lake Forest are home to hundreds of tech companies ranging from startups to major enterprises like Broadcom and Western Digital. Engineers, product managers, and salespeople in this sector move between competitors regularly. Non-competes signed at companies in other states are void once the worker is in California. SB 699 made this explicit, and OC tech workers benefit directly.
Biotech and medical devices
Orange County’s biotech corridor, anchored by companies near the intersection of the 405 and the 73 toll road, employs thousands of researchers, regulatory affairs professionals, and commercial specialists. Workers in this sector move around, and their expertise is in demand. Former employers in Massachusetts or New Jersey (where non-competes are common in biotech) sometimes try to restrict workers who move to OC. Those restrictions are void.
Financial services
Newport Beach and its surrounding area house a concentration of asset managers, private equity firms, and financial advisory companies. Portfolio managers and analysts who leave one firm for a competitor often face non-compete threats. Under California law, those agreements are unenforceable, but the threats can still be intimidating. Get an attorney to respond quickly.
Franchises and sales
Orange County’s retail and franchise businesses, from Bristol Street shopping centers in Costa Mesa to the South Coast Plaza area, employ salespeople and managers who sometimes sign non-competes as part of franchise or employment agreements. Those agreements are void, and the workers are free to join competitors or open their own businesses in the same market.
Can an Employer Require You to Sign a Non-Compete in California?
No. Under the combined effect of section 16600, SB 699, and AB 1076, an employer cannot require a California employee to sign a non-compete agreement. If an employer asks you to sign one, you can refuse. If the employer retaliates against you for refusing, you have a retaliation claim under Labor Code section 1102.5 (reporting a suspected violation of law) and potentially under the new statutes.
If you’re asked to sign a non-compete as a condition of employment in Orange County, ask for the agreement in writing, tell the employer you need time to review it with an attorney, and contact a lawyer before you sign anything. In many cases, the simple act of involving an attorney causes the employer to withdraw the request.
What Should You Do If You Signed a Non-Compete Years Ago?
If you signed a non-compete while working for a California employer, it was void from the moment you signed it. Section 16600 doesn’t require you to challenge the agreement in court for it to be void. It’s void by operation of law.
If you signed one while working in another state and later moved to California (or now compete with your former employer from California), SB 699 makes clear that the agreement is unenforceable against you.
Check for the employer notification
Under SB 699, your employer was required to notify you by February 14, 2024, that any non-compete provision in your agreement is void. If you were employed by the company after January 1, 2022, and you signed a non-compete at any point, the employer owed you this written notice.
If you didn’t receive it, document that fact. Save your email search showing no such notice was received. This is potential evidence if you later need to bring a claim.
Review your full agreement
Non-compete provisions can hide in employment agreements, offer letters, equity award agreements, and even employee handbooks. Read the full text of whatever you signed. Look for language restricting where you can work, who you can work for, or what industry you can work in after leaving. Any such restriction is void under California law.
What If You’re a Remote Worker with a Non-Compete?
Remote work has raised new questions about which state’s law applies. If you work remotely from Orange County for a company headquartered in a state that enforces non-competes, California law applies to you. SB 699 makes this explicit by voiding non-competes regardless of where they were signed.
California follows the worker
The physical location where you work determines which state’s employment laws apply. If you work from an apartment in Costa Mesa for a company in Austin, you’re a California worker. Your employer can’t avoid section 16600 by putting a choice-of-law clause in your contract that says Texas law governs. California courts have consistently held that section 16600 reflects a fundamental public policy that can’t be contracted around.
The growing remote workforce in OC
Orange County’s remote and hybrid workforce has expanded significantly since 2020. Workers in Irvine, Mission Viejo, and San Clemente work for companies across the country. Many of these workers signed non-competes when they were physically located in other states and later moved to California. Under SB 699, those agreements are void and the employer must notify the worker that the restriction no longer applies.
If you moved to Orange County and your out-of-state employer hasn’t addressed your non-compete, send a written request asking the company to confirm that it won’t enforce the restriction. Save the request and any response. That documentation protects you if the employer later claims you breached the agreement.
How Mister Wolf P.C. Helps Orange County Workers with Non-Compete Issues
We handle non-compete matters for workers across Orange County, from tech engineers in Irvine to executives in Newport Beach to sales professionals in Anaheim. We review the agreement, confirm it’s void under California law, and then either tell the client they’re free to proceed or send a formal response to the former employer putting them on notice.
If the former employer persists in trying to enforce a void non-compete, we file suit in Orange County Superior Court seeking declaratory relief, damages, and attorney’s fees under SB 699 and AB 1076. The Harbor Justice Center in Newport Beach and the Central Justice Center in Santa Ana both handle civil employment matters, and we know both courthouses well.
Non-competes aren’t the only area where California employers overstep. If your employer is also violating meal and rest break rules, those claims can be pursued alongside the non-compete issue.
If you have a non-compete agreement and you’re wondering whether it limits your next career move, the answer in California is almost certainly no. Pull out your agreement, read it, and then schedule a consultation with Mister Wolf P.C. We’ll tell you in one meeting whether your agreement is enforceable (it probably isn’t) and exactly what to do next.