E-TIPS

Non-Compete Agreements Prohibited in California

Employers frequently are unaware that non-compete agreements are prohibited under California law. Business and Professions Code Section 16600 provides that every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is void. Courts have interpreted Section 16600 as the basis to prohibit non-compete agreements. California has a strong public policy to ensure employees will not be prevented from earning a living if they choose to leave a particular job. In addition, California employers who terminate an employee for refusing to sign a non-competition agreement may be liable for wrongful termination.