Under California non-solicitation law, agreements that stop you from contacting your former employer’s clients or recruiting your former coworkers are void and unenforceable. Business and Professions Code Section 16600 has voided restrictive covenants for over a century, and SB-699 — effective January 1, 2024 — added Section 16600.5, which gives you the right to sue over enforcement attempts and recover your attorney’s fees if you win. The rule applies whether you signed the agreement in California or another state, and whether you signed it last month or a decade ago.
Why Non-Solicitation Clauses Are Void in California
Section 16600 states that any contract restraining someone from engaging in a lawful profession, trade, or business is void to that extent.1California Legislative Information. California Business and Professions Code 16600 – Contracts in Restraint of Trade A 2023 amendment instructs courts to read that ban broadly, voiding noncompete provisions in the employment context “no matter how narrowly tailored” unless a specific statutory exception applies.
Some employers argue that a non-solicitation clause is different from a traditional non-compete because it only limits who you can talk to, not where you can work. California courts have largely rejected that distinction. In AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018), the Court of Appeal struck down an employee non-solicitation clause because enforcing it would have prevented recruiters from practicing their profession. A federal court in Barker v. Insight Global (2019) invalidated a non-solicitation provision outright under Section 16600.
Both flavors of non-solicitation clause fall under the same rule:
- Customer non-solicitation restricts you from contacting clients of your former employer. For salespeople, consultants, and anyone whose work depends on client relationships, this functions as a de facto non-compete and is void.
- Employee non-solicitation restricts you from recruiting or hiring former coworkers. Employers once treated these as safer, but California hostility to them has grown, and the Attorney General has pursued commercial “no-poach” arrangements under similar reasoning.
California does not carve out a safe harbor based on which type of non-solicitation is at issue. Both are evaluated under the same standard, and both are generally void.
What SB-699 Changed on January 1, 2024
Non-solicitation clauses were already void before SB-699. What the new Section 16600.5 added were teeth. Three changes matter in practice.
Employers are now flatly prohibited from entering into contracts with employees or prospective employees that contain provisions void under the chapter.2California Legislative Information. California Business and Professions Code 16600.5 Including a non-solicitation clause in an offer letter or employment agreement is itself a violation, even if the employer never actually tries to enforce it.
Any violation is labeled a “civil violation,” creating an explicit statutory hook that did not previously exist.2California Legislative Information. California Business and Professions Code 16600.5
Employees, former employees, and prospective employees now have a private right of action to seek injunctive relief, actual damages, or both, and a prevailing employee is entitled to recover reasonable attorney’s fees and costs.2California Legislative Information. California Business and Professions Code 16600.5 The fee-shifting runs one way. If the employee wins, the employer pays. Before SB-699, workers challenging a non-solicitation clause absorbed their own legal costs even after prevailing. That single change reshaped the risk calculus for enforcement.
If You Signed the Agreement in Another State
Section 16600.5 says a void contract is unenforceable “regardless of where and when the contract was signed,” and employers cannot try to enforce such a contract “regardless of whether the contract was signed and the employment was maintained outside of California.”2California Legislative Information. California Business and Professions Code 16600.5
The legislature’s findings behind the bill say the quiet part out loud: “California’s public policy against restraint of trade law trumps other state laws when an employee seeks employment in California, even if the employee had signed the contractual restraint while living outside of California and working for a non-California employer.”3California Legislative Information. SB-699 Contracts in Restraint of Trade
So a non-solicitation clause you signed in Texas, Florida, or anywhere else becomes unenforceable once you work in California. A choice-of-law clause designating another state’s law does not save it. If you live and work here, California law governs your restrictive covenants.
The Narrow Exceptions
Two situations still permit restrictive covenants, and neither helps an employer trying to enforce a routine non-solicitation clause against a worker.
If you sell your business (including its goodwill), sell all of your ownership interest, or the entity sells substantially all of its operating assets along with goodwill, you can agree with the buyer not to operate a similar business within a defined geographic area where the business previously operated.4California Legislative Information. California Business and Professions Code 16601 The restriction lasts only as long as the buyer keeps operating a similar business in that area.
Partners can also agree, when a partnership dissolves or a partner leaves, that the departing partner will not operate a competing business within a specified geographic area where the partnership did business.5California Legislative Information. California Business and Professions Code 16602 This applies to actual partners, not employees handed a “partner” title without a genuine ownership stake.
If you did not sell a business interest or dissolve a partnership, these exceptions have nothing to do with you.
What About NDAs and Trade Secrets?
SB-699 did not eliminate legitimate confidentiality protections. A well-drafted non-disclosure agreement covering actual trade secrets remains enforceable. The question is what the agreement really prohibits.
An NDA saying you cannot share the company’s proprietary customer database with a competitor is protecting a trade secret. An NDA saying you cannot contact any client you worked with during your employment is restricting your profession. The first is generally enforceable. The second is void under Section 16600, regardless of the label on the document.
To qualify as a trade secret under California’s Uniform Trade Secrets Act, information must have independent economic value from not being generally known, and the company must have taken reasonable steps to keep it secret. Customer lists can qualify, but only when they represent more than names anyone in the industry could compile from public sources. California courts look past the label on a document and examine what it actually restricts. If the practical effect is to keep you from doing business, it is void whatever the employer calls it.
What to Do If Your Employer Tries to Enforce a Clause
Section 16600.5 gives you two categories of relief when an employer tries to enforce a void non-solicitation agreement. You can seek an injunction ordering the employer to stop, and you can recover actual damages for any harm the enforcement attempt caused you.2California Legislative Information. California Business and Professions Code 16600.5 Actual damages can include lost income from a job or client opportunity you turned down because of the clause, or costs from responding to cease-and-desist letters.
A prevailing employee also recovers reasonable attorney’s fees and costs.2California Legislative Information. California Business and Professions Code 16600.5 Every cease-and-desist letter threatening enforcement is now a potential invitation for the employer to pay both your damages and your lawyer’s bills.
A separate 2023 law, AB 1076, required employers to notify current employees and certain former employees by February 14, 2024, that any non-compete or non-solicitation clauses in their contracts are void. The California Attorney General warned that failing to send this notice is an act of unfair competition.6Office of the Attorney General. Attorney General Bonta Issues Consumer Alert Reminding California Workers of Their Rights If you never received that notice and have a non-solicitation clause in your paperwork, your employer may already be on the hook for that failure on top of any enforcement attempt.
Older contracts are covered too. Section 16600.5 declares void contracts unenforceable “regardless of where and when the contract was signed.”2California Legislative Information. California Business and Professions Code 16600.5 Non-solicitation clauses were already void under Section 16600 before SB-699 existed; whether every remedy in the new law reaches pre-2024 enforcement conduct is still developing, but the underlying agreement is not enforceable against you either way.
Freelancers and Independent Contractors
Section 16600 voids any contract restraining “anyone” from engaging in a lawful profession.1California Legislative Information. California Business and Professions Code 16600 – Contracts in Restraint of Trade If you are a 1099 contractor or freelancer who signed a non-solicitation agreement with a client, the same prohibition applies to you.
SB-699’s private enforcement provisions specifically reference employees, former employees, and prospective employees, which leaves open a question about whether contractors can invoke the same fee-shifting remedies. The underlying agreement is still void under Section 16600, and contractors can challenge enforcement through other legal channels, including unfair competition claims.