Noncompete & Nonsolicitation: How Are They Different In California?

Noncompete and Nonsolicitation in California and the Federal Backdrop

Note: This is an older question and there have been updates on the both the California and Federal level in 2025.

As a business and employment attorney practicing in California, I am frequently asked about non-compete and non-solicitation agreements especially during hiring, exits, fundraising ,or disputes. The confusion has only increased in recent years due to headlines about federal action and shifting enforcement priorities.

In California the rule remains clear. Noncompete agreements are generally void and unenforceable. Business and Professions Code section 16600 reflects a strong public policy favoring employee mobility and open competition. Outside of narrow exceptions involving the sale of a business or dissolution of a partnership an employer cannot restrict a current or former employee from competing after the relationship ends. Reasonableness does not save these clauses. They are invalid as a matter of law.

Non-solicitation provisions were once thought to be a safer alternative but that assumption is now largely outdated. California courts have made clear that customer nons-olicitation clauses are also unenforceable if they operate as a restraint on trade. Many employee nonsolicitation provisions are similarly vulnerable. The trend is unmistakable California disfavors post employment restrictions that limit ordinary competition or mobility.

The TLDR on non-compete vs. non-solicitation is this:

• Non-compete: relates to an employee not going to work for a competitor or starting a business that is competitive to the employer they signed the non-compete with
• Non-solicitation:  relates to an employee NOT soliciting other employees, customers or vendors of the employer they signed the non-solicitaiton with.

That does not mean companies are unprotected. California law allows robust protection of trade secrets confidential information and proprietary data. Properly drafted confidentiality agreements trade secret claims and unfair competition remedies remain enforceable. What California rejects is using restrictive covenants as a substitute for competing on quality culture and execution.

At the federal level the FTC attempted to change the landscape entirely. In April 2024 the agency issued a rule that would have banned most noncompete agreements nationwide. The rule was immediately challenged and later vacated by a federal court which held that the FTC lacked authority to impose such a sweeping ban. Importantly the FTC chose not to appeal and formally abandoned the rule in early 2025.

As a result there is no federal noncompete ban. Enforceability remains governed primarily by state law. The FTC episode is still significant because it signals continued federal skepticism toward noncompetes but it does not override existing state frameworks.

The takeaway is straightforward. Headlines do not change the law. In California noncompetes are void and many nonsolicitation clauses are unenforceable. In other states the analysis is jurisdiction specific and fact driven. Employers relying on outdated templates or assumptions face real legal risk. Employees should know that the presence of a clause does not mean it is enforceable.

If you have a question on this as an employer or employee, contact a labor attorney and/or feel free to contact us.