Non-compete agreements have long been controversial in California — and now, they’ve reached a new level of legal risk.
Recent legislation has made it a direct violation of California labor law for employers to impose non-compete agreements on employees. That’s not just about being unenforceable — now, having non-compete language in your contracts could actively expose your business to legal consequences.
If you’re a business owner, HR professional, or in-house operations leader, this shift should raise an important question:
How do you protect your business, your clients, and your intellectual property — without using a non-compete?
In this article, we’ll walk you through:
- What the law says now
- The risks of outdated employment contracts
- Legal strategies you can use to protect your trade secrets
- How to ensure your documentation complies with California’s strict labor code
What Changed: From Unenforceable to Illegal
California has long treated non-compete agreements with skepticism. Since at least 2008, courts have consistently ruled them unenforceable. However, recent changes to California law have gone further. Now, it’s not just that non-competes don’t hold up in court. Employers who include non-compete clauses in their contracts may be violating labor law, subject to penalties and private litigation.
Why You Need to Review Past & Current Employment Agreements
Most employers understand not to include non-compete clauses in new contracts — but what about old ones?
If you’ve used templates, hired employees years ago, or relied on out-of-state legal guidance, you may have contracts on file that include problematic non-compete language.
Now is the time to audit your employment agreements.
Failing to address outdated or non-compliant contract terms could result in:
- Lawsuits filed by former employees
- Penalties under the California Labor Code
- Reputational damage for violating employee rights
How to Legally Protect Your Business Without a Non-Compete
You can still safeguard your company’s proprietary information — but you must do it using strategies that are compliant with California law.
Here are key steps to consider:
1. Use Trade Secret Protection Under the Uniform Trade Secrets Act (UTSA)
This allows you to take legal action if an employee misappropriates confidential business information — like client lists, internal processes, or proprietary data — even after they leave your company.
2. Create and Enforce Confidentiality & Non-Disclosure Agreements (NDAs)
While non-competes are off the table, NDAs and confidentiality clauses are still enforceable when properly written. These can prevent current and former employees from sharing sensitive information.
3. Implement Internal Safeguards
Limit access to proprietary information on a need-to-know basis. Use strong internal protocols for password protection, data sharing, and employee exits.
4. Secure Intellectual Property
Where applicable, protect your brand assets through trademark, copyright, or patent registration.
Think of It Like This:
You don’t need a non-compete to protect your “11 herbs and spices.”
You need airtight systems, enforceable contracts, and a legal partner who understands the California business landscape.
Action Checklist for Employers & HR Teams
- Audit all employee agreements (past and present) for non-compete language
- Replace outdated clauses with legally enforceable alternatives
- Consult legal counsel to draft or update NDAs and confidentiality agreements
- Train HR teams and managers on compliant hiring and exit practices
- Review your IP portfolio (trademarks, copyrights, patents)
- Document and protect your trade secrets using formal procedures
Need Guidance? Koegle Law Group Is Here to Help
At Koegle Law Group, we specialize in employment law for California businesses — from contract audits to trade secret protection. Whether you’re a small team or a growing enterprise, we’ll help ensure your documentation is compliant, enforceable, and built to protect your business.
Let’s review your agreements before someone else does.
📞 Call us at (661) 362-0813
🌐 Visit: koeglelaw.com
📍 Based in Santa Clarita, serving employers across California and Texas
