If you have ever signed an employment agreement in California, there is a good chance it had a non-compete clause buried in it. And if you are like most people, you either signed it without reading it closely or assumed it was just standard language that did not matter much.
Here is the thing: California has some of the strongest protections against non-competes in the country. But that does not mean those clauses are harmless.
What Is a Non-Compete Agreement?
A non-compete agreement is a contract provision that restricts an employee from working for a competitor, starting a competing business, or practicing in the same industry after leaving a job. In many states, these are routine and enforceable. In California, they are almost always void.
California’s Position
Most California employees can work for a competitor immediately after leaving, start a competing business, and continue working in the same field, even if their employment agreement says otherwise.
So Why Do Employers Keep Including Them?
A few reasons.
Some employers genuinely do not know better. Many companies headquartered outside California use standard agreements drafted under other states’ laws and apply those same contracts to California employees without updating anything. It is a compliance blind spot that creates real exposure.
Some employers know exactly what they are doing. A technically unenforceable clause can still work in practice. If an employee believes they are legally prohibited from joining a competitor, they may pass on opportunities or never challenge the restriction at all. Employers benefit from that uncertainty even when they could not win in court.
Some employers are pushing their luck. California law has narrow exceptions, including around the sale of a business. Some employers stretch those exceptions and bet that most employees will not push back.
The result is that employees are regularly held back by agreements a court would likely throw out, simply because nobody told them they had options.
What Changed in 2024
Two new laws took effect January 1, 2024.
SB 699 made it a civil violation for an employer to enter into or attempt to enforce a void non-compete, regardless of where or when the agreement was signed. If you signed a non-compete while working in Texas and later moved to California, your former employer may face real legal exposure trying to enforce that agreement here. SB 699 also gives employees a private right of action to recover damages, injunctive relief, and attorneys fees.
AB 1076 required employers to affirmatively notify current and former employees that non-compete provisions in their contracts were void. That deadline was February 14, 2024. If you never received that notice, that is worth knowing.
What About “Stay or Pay” Agreements?
Non-competes are not the only tool employers use to discourage people from leaving. Training repayment or “stay or pay” clauses require employees to repay certain costs if they leave before a specified period.
Assembly Bill 692, effective January 1, 2026, broadly prohibits these arrangements going forward. Employers can no longer require workers to repay debts or face financial penalties simply for leaving a job. Limited exceptions exist for properly structured sign-on or retention bonuses. And critically, the law only applies to contracts entered on or after January 1, 2026. If your agreement predates that, the old rules still apply to it.
Why “Boilerplate” Language Deserves a Closer Look
This is where a lot of people get tripped up.
Even if a non-compete is unenforceable, other provisions sitting right next to it may not be. Non-solicitation clauses, confidentiality obligations, and trade secret restrictions often get lumped under the same non-compete label but they operate very differently under California law. Employees assume the whole section is void. It is not always.
Choice of law provisions are another issue worth flagging. Some agreements state that another state’s law governs the contract. Whether that actually holds up in California depends on the specific facts, but it creates confusion and risk if you do not understand what you agreed to.
A lawyer reviewing your agreement is not just checking whether a clause is labeled correctly. They are reading the full picture, what you have actually agreed to, what is enforceable, what your employer can and cannot do, and where you have real leverage.
What Employers Should Use Instead
California’s restrictions do not leave businesses without protection. Employers can still protect trade secrets, confidential information, proprietary business data, and intellectual property through properly drafted agreements. The key is using contracts that are actually designed for California, not templates carried over from another state or drafted five years ago when the law looked different.
If your agreements have not been reviewed since before 2024, you are carrying risk you may not be aware of.
The Farukhi Law Take
Whether you are an employee who just received an offer with a non-compete buried on page seven, or an employer whose agreements are overdue for a review, the law in this area has moved and the stakes are real.
Contact Farukhi Law at office@farukhilawadvisors.com to discuss your employment agreements, restrictive covenants, and workforce policies across healthcare, startups, and growing businesses. If you have been told something is standard language and want to know whether that is actually true, reach out before you sign, not after.
DISCLAIMER: This article is for informational purposes only and does not constitute legal advice.