Void, but still printed

Why the Legislature had to say it twice

Section 16600 has made non-competes void in California for well over a century. That did not stop them appearing in California employment agreements, because a void clause still works on anyone who believes it.

So in 2023 the Legislature passed two bills that attacked the belief, not the clause. SB 699 added Business and Professions Code 16600.5, which voids these provisions no matter where they were signed, forbids employers from trying to enforce them against Californians, and gives the worker a private claim with attorney’s fees. AB 1076 added Business and Professions Code 16600.1, which required employers to send individualized written notice by February 14, 2024 to current and former employees telling them their non-compete clause was void.

Think about what that second statute implies. The Legislature concluded that workers were being restrained by clauses that had never been enforceable, and that the remedy was to make employers go back and tell them so in writing.

What the 2024 statutes actually do

Read the two newer sections separately, because they work differently.

Business and Professions Code 16600.1 makes it unlawful to include a non-compete clause in an employment contract at all. The wrong is in the drafting as well as the enforcement, and a violation is an act of unfair competition under Business and Professions Code 17200. That is also the section behind the February 14, 2024 notice duty described above.

Business and Professions Code 16600.5 attacks enforcement. An employer shall not enter into, or attempt to enforce, a void non-compete. Doing so is a civil violation in its own right. A current, former or prospective employee may sue for injunctive relief or actual damages, and under 16600.5(e) a prevailing employee recovers attorney’s fees. Statutory exceptions exist, mainly around the sale of a business, so the first question is always whether an exception applies.

One limit is unsettled. Whether a standalone separation agreement counts as an “employment contract” for the inclusion ban in 16600.1 has not been squarely litigated. [Unverified] The clause is void under 16600 either way, and 16600.5’s ban on attempting to enforce a void clause does not depend on that question. But the stronger claim, that printing it in your severance paperwork was itself a separate violation, is an argument waiting for a case, not a settled one. This site will not present it as settled, and neither should you.

What actually survives

This is where people over-correct. Several things in that same section of your agreement are real:

• Trade secrets. California’s Uniform Trade Secrets Act protects genuine confidential information. Taking customer lists, source code, pricing models or strategy documents is a real legal risk, contract or no contract.
• Confidentiality of actual confidential information. A legitimate obligation, within limits and subject to the carve-outs discussed in The unwaivable waiver.
• Invention assignment, subject to Labor Code 2870, which protects work you did entirely on your own time, without company equipment, facilities, supplies or trade secrets, and unrelated to the company’s business or your work for it.
• Non-solicitation of employees in some circumstances. The law here is less settled than for customer non-solicits, and it is worth asking about before relying on either answer.

The choice-of-law trick

Watch for a clause saying the agreement is governed by Delaware law and that disputes go to a Delaware court. For a worker who lives and works in California, that single sentence can move an entire dispute into a state where non-competes are enforceable.

Labor Code 925 addresses this. It generally allows a California employee to void a provision requiring adjudication outside California or applying another state’s law to a California-based dispute, where the employee was not represented by their own counsel in negotiating it. It is one of the quieter but more important protections in California employment law, and it is one more reason to read the last two pages of the agreement, where this clause always lives.

The ideal

In the ideal process, a clause the law has voided is not in the document. If a term is unenforceable in California, for a California worker, it is removed in drafting, or printed with its limit stated beside it. A worker should be able to assume that what a lawyer drafted and a company signed describes obligations that exist. Every void clause left standing spends that credibility on silence.

Why it works

A void clause works the same way an enforceable one does, for a reader who cannot tell them apart. Loss aversion, from Kahneman and Tversky (1979), supplies the motive force: the clause threatens a loss, of money, of a future job, of a lawsuit, and losses weigh more heavily than equivalent gains, so the rational response to an unpriced threat is to say nothing and move on. Authority completes it. Print, letterhead, and a signature block signal that the words were vetted. Almost nobody checks whether the Legislature has already answered the question.

The words to propose

Reading a void clause costs nothing, but the negotiation goes better when the fix arrives written out. The redline toolkit has the substitute language in full, including the deletion proposal for a non-compete and the fallback that keeps the confidentiality and trade secret obligations California law does allow. Propose the deletion over a softer version of the restraint. A void clause that is merely narrowed is still standing there doing its work.