If you're a business owner, professional, or executive wishing to protect your company's valuable intellectual property, it's important to understand how California's non-compete regulations affect you. Non-compete agreements, or “restrictive covenants”, are legally enforceable contracts that limit the rights of a person to compete with a former employer or business partner. Though California has traditionally been reluctant to enforce non-competes, there are a number of legal strategies that can help protect proprietary knowledge and confidential information. Through a mix of internal policies and consulting with experienced lawyers familiar with California laws and regulations, you can protect your business interests and ensure the longevity of your success.

When it comes to non-compete contracts, many business owners are hesitant to negotiate agreement terms due to the myriad of potential pitfalls and legal problems associated with them. The state of California, however, is one of the only states that generally considers non-competes to be “void and unenforceable” under Business & Professions Code § 16600. This law goes even further to state that any provisions in a contract that prohibit an individual from engaging in a lawful profession, trade, or business are considered illegal and cannot be enforced.

To put this in plain English, California generally disfavors non-compete agreements. Still, there are some circumstances in which non-compete provisions may be legally enforced in California. For instance, if you are selling or transferring your business, or if you have a valuable company secret that you wish to protect, then it may be possible to negotiate a valid non-compete agreement.

Furthermore, since there are many exceptions to the general rule of disfavoring non-competes, it’s important to stay informed on the latest developments in the state. Consulting with experienced legal counsel in the Los Angeles area is one of the best ways to ensure that your agreement is legally binding, and UpCounsel is an excellent option for business owners seeking out experienced legal services.

UpCounsel’s robust network of experienced attorneys has an average of 14 years of practical experience, and their profiles clearly display their client ratings and reviews for all of their past work. Whether you’re seeking out a one-time consultation or an entire freelance legal department, UpCounsel’s online attorneys are more than qualified to provide you with high-quality, cost-effective legal services.

Businesses and professionals should also take the time to create internal policies for employees that detail the proper handling and protection of confidential information, trade secrets, and other company properties. California Penal Code § 487 makes it illegal to “knowingly take, use […] or disseminate” another person’s trade secret, and “commercial misappropriation” is included in this statute.

This means that it may be possible to sign an internal non-compete agreement, but it must be clear that employees are not allowed to share confidential company information with competitors. Any such agreement should also include language that requires former employees to return trade secrets belonging to the company.

Though non-compete agreements are generally looked down upon in California, there are certain cases in which these contracts can be validly enforced. By researching the relevant laws, creating internal policies, and consulting with UpCounsel’s experienced attorneys, you have the tools to protect your intellectual property, confidential information, and other business interests.


Non-Compete Regulation,

Sunny California,

Business Owners