Business and Professions Code section 16600 provides that, with some stated exceptions, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” In Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, the Supreme Court held that the general statutory prohibition covers employee noncompetition agreements.
Last month, the Governor signed legislation — Assembly Bill 1076 — amending section 16600 to provide that the statute “shall be read broadly, in accordance with Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception in this chapter.” The bill also states, the amendment “does not constitute a change in, but is declaratory of, existing law.” (See a legislative analysis here.)
