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(323) 652-9451 - LA| Many California employers are unfamiliar with Bus. & Prof. Code Sec. 16600, which bans any agreement that would prohibit another from competing in the same field. However, there are three narrow statutory exceptions where noncompete terms may be enforceable:
(1) Sale of Business (§ 16601): A seller of a business may agree not to compete with the buyer within a reasonable geographic area, so long as the seller receives value and transfers goodwill. (2) Dissolution of Partnership (§ 16602): Partners leaving or dissolving a partnership may agree not to compete in a specific area. (3) Dissolution of LLC (§ 16602.5): Similar rules apply when members withdraw from or dissolve an LLC. Outside these exceptions, even narrowly tailored noncompetes are unenforceable, and employers should instead rely on trade secret and confidentiality protections |
