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Non-Compete Clauses In California
Non-compete clauses in employment contracts typically seek to preclude employees from working for a competitor for a specific period of time and within a specific geographic area. Most states allow non-competition agreements, provided they are reasonable in scope and justified by the employer's legitimate business interests. California, however, generally prohibits covenants not to compete, subject to limited exceptions.
California's Broad Ban On Non-Competition Agreements
California Business and Professions Code Section 16600 is the source of the state's fundamental public policy against non-competition agreements. It ensures that except as specifically provided by a statutory exception, “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 fundamental public policy behind Section 16600 has been articulated by the California Supreme Court:
Every individual possesses as a form of property, the right to pursue any calling, business, or profession he may choose. A former employee has the right to engage in a competitive business for him- self and to enter into competition with his former employer, even for the business of those who had formerly been the customers of his former employer, provided that such competition is fairly and legally conducted.
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