Section § 16600

Explanation

In California, any contract that stops someone from working in their profession or trade is generally considered invalid. This includes noncompete agreements in work settings, even if they're carefully designed, unless they clearly fit into an exception. The law is interpreted based on a court case (Edwards v. Arthur Andersen LLP) to make sure noncompete agreements are usually not allowed. This rule applies even if the person being restricted isn't part of the contract.

(a)CA Business & Professions Code § 16600(a) Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.
(b)Copy CA Business & Professions Code § 16600(b)
(1)Copy CA Business & Professions Code § 16600(b)(1) This section 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.
(2)CA Business & Professions Code § 16600(b)(2) This subdivision does not constitute a change in, but is declaratory of, existing law.
(c)CA Business & Professions Code § 16600(c) This section shall not be limited to contracts where the person being restrained from engaging in a lawful profession, trade, or business is a party to the contract.

Section § 16600.1

Explanation

This law makes it illegal for employers in California to put noncompete clauses in employment contracts unless they fall under specific exceptions. If a contract with a noncompete clause doesn't meet these exceptions, employers must inform current and former employees (employed after January 1, 2022) by February 14, 2024, that these clauses are invalid. The notice must be sent to the employee's last known physical and email addresses. Violating this law is considered unfair competition.

(a)CA Business & Professions Code § 16600.1(a) It shall be unlawful to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy an exception in this chapter.
(b)Copy CA Business & Professions Code § 16600.1(b)
(1)Copy CA Business & Professions Code § 16600.1(b)(1) For current employees, and for former employees who were employed after January 1, 2022, whose contracts include a noncompete clause, or who were required to enter a noncompete agreement, that does not satisfy an exception to this chapter, the employer shall, by February 14, 2024, notify the employee that the noncompete clause or noncompete agreement is void.
(2)CA Business & Professions Code § 16600.1(b)(2) Notice made under this subdivision shall be in the form of a written individualized communication to the employee or former employee, and shall be delivered to the last known address and the email address of the employee or former employee.
(c)CA Business & Professions Code § 16600.1(c) A violation of this section constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).

Section § 16600.5

Explanation

This law states that any contract that is considered void is unenforceable, no matter where or when it was signed. Employers cannot try to enforce such contracts, even if they were signed outside California. Employers are also prohibited from including void provisions in contracts with current or potential employees. If an employer does so or tries to enforce a void contract, it is a civil violation. Employees, former employees, or prospective employees can take legal action to stop such violations and can claim damages. If they win, they can also recover attorney's fees and costs.

(a)CA Business & Professions Code § 16600.5(a) Any contract that is void under this chapter is unenforceable regardless of where and when the contract was signed.
(b)CA Business & Professions Code § 16600.5(b) An employer or former employer shall not attempt to enforce a contract that is void under this chapter regardless of whether the contract was signed and the employment was maintained outside of California.
(c)CA Business & Professions Code § 16600.5(c) An employer shall not enter into a contract with an employee or prospective employee that includes a provision that is void under this chapter.
(d)CA Business & Professions Code § 16600.5(d) An employer that enters into a contract that is void under this chapter or attempts to enforce a contract that is void under this chapter commits a civil violation.
(e)Copy CA Business & Professions Code § 16600.5(e)
(1)Copy CA Business & Professions Code § 16600.5(e)(1) An employee, former employee, or prospective employee may bring a private action to enforce this chapter for injunctive relief or the recovery of actual damages, or both.
(2)CA Business & Professions Code § 16600.5(e)(2) In addition to the remedies described in paragraph (1), a prevailing employee, former employee, or prospective employee in an action based on a violation of this chapter shall be entitled to recover reasonable attorney’s fees and costs.

Section § 16601

Explanation

If you sell the goodwill of your business or give up your ownership in a company, you can agree not to start a similar business in certain areas where your business used to operate. This rule helps protect the buyer, as long as they continue running a similar business there. "Business entity" includes partnerships, LLCs, and corporations. "Owner" means those with a partnership stake, membership, or stock in these entities, and "ownership interest" refers to those stakes or stocks. A "subsidiary" is any business a parent company controls or benefits from financially upon its closure.

Any person who sells the goodwill of a business, or any owner of a business entity selling or otherwise disposing of all of his or her ownership interest in the business entity, or any owner of a business entity that sells (a) all or substantially all of its operating assets together with the goodwill of the business entity, (b) all or substantially all of the operating assets of a division or a subsidiary of the business entity together with the goodwill of that division or subsidiary, or (c) all of the ownership interest of any subsidiary, may agree with the buyer to refrain from carrying on a similar business within a specified geographic area in which the business so sold, or that of the business entity, division, or subsidiary has been carried on, so long as the buyer, or any person deriving title to the goodwill or ownership interest from the buyer, carries on a like business therein.
For the purposes of this section, “business entity” means any partnership (including a limited partnership or a limited liability partnership), limited liability company (including a series of a limited liability company formed under the laws of a jurisdiction that recognizes such a series), or corporation.
For the purposes of this section, “owner of a business entity” means any partner, in the case of a business entity that is a partnership (including a limited partnership or a limited liability partnership), or any member, in the case of a business entity that is a limited liability company (including a series of a limited liability company formed under the laws of a jurisdiction that recognizes such a series), or any owner of capital stock, in the case of a business entity that is a corporation.
For the purposes of this section, “ownership interest” means a partnership interest, in the case of a business entity that is a partnership (including a limited partnership a limited liability partnership), a membership interest, in the case of a business entity that is a limited liability company (including a series of a limited liability company formed under the laws of a jurisdiction that recognizes such a series), or a capital stockholder, in the case of a business entity that is a corporation.
For the purposes of this section, “subsidiary” means any business entity over which the selling business entity has voting control or from which the selling business entity has a right to receive a majority share of distributions upon dissolution or other liquidation of the business entity (or has both voting control and a right to receive these distributions.)

Section § 16602

Explanation

This law section says that if a partner leaves a partnership, either because the partnership ends or the partner leaves for some reason, the partner can agree not to start or run a similar business in the same area where the partnership operated. This agreement is valid as long as the remaining partners or anyone who takes over the business still operates there.

(a)CA Business & Professions Code § 16602(a) Any partner may, upon or in anticipation of any of the circumstances described in subdivision (b), agree that he or she will not carry on a similar business within a specified geographic area where the partnership business has been transacted, so long as any other member of the partnership, or any person deriving title to the business or its goodwill from any such other member of the partnership, carries on a like business therein.
(b)CA Business & Professions Code § 16602(b) Subdivision (a) applies to either of the following circumstances:
(1)CA Business & Professions Code § 16602(b)(1) A dissolution of the partnership.
(2)CA Business & Professions Code § 16602(b)(2) Dissociation of the partner from the partnership.

Section § 16602.5

Explanation

This law allows a member of a limited liability company (LLC) to agree not to start a similar business in the same area when they leave the LLC. This agreement only applies if another member or someone who got the business rights from another member is still running the same type of business there.

Any member may, upon or in anticipation of a dissolution of, or the termination of his or her interest in, a limited liability company (including a series of a limited liability company formed under the laws of a jurisdiction recognizing such a series), agree that he or she or it will not carry on a similar business within a specified geographic area where the limited liability company business has been transacted, so long as any other member of the limited liability company, or any person deriving title to the business or its goodwill from any such other member of the limited liability company, carries on a like business therein.

Section § 16603

Explanation

This law makes it illegal to force someone to buy horror comic books as a condition of purchasing other magazines or books. If you do this, you could be fined up to $1,000, sent to jail for up to six months, or both. But it's okay to require someone to buy a certain number of copies of the same issue of a publication. A horror comic book is defined as one with a sequence of drawings or photos that depict crimes like murder or robbery, combined with a storyline or character dialogue. This rule applies to individuals, businesses, and organizations.

Every person who, as a condition to a sale or consignment of any magazine, book, or other publication requires that the purchaser or consignee purchase or receive for sale any horror comic book, is guilty of a misdemeanor, punishable by imprisonment in the county jail not exceeding six months, or by fine not exceeding one thousand dollars ($1,000), or by both.
This section is not intended to prohibit an agreement requiring a person to purchase or accept on consignment a minimum number of copies of a single edition or issue of a magazine or of a particular book or other particular publication.
As used in this section “person” includes a corporation, partnership, or other association.
As used in this section “horror comic book” means any book or booklet in which an account of the commission or attempted commission of the crime of arson, assault with caustic chemicals, assault with a deadly weapon, burglary, kidnapping, mayhem, murder, rape, robbery, theft, or voluntary manslaughter is set forth by means of a series of five or more drawings or photographs in sequence, which are accompanied by either narrative writing or words represented as spoken by a pictured character, whether such narrative words appear in balloons, captions or on or immediately adjacent to the photograph or drawing.

Section § 16604

Explanation

This law makes it illegal for someone to force a buyer or consignee to accept additional magazines, books, or publications when they buy or receive a magazine or book. If someone does this, they're committing a misdemeanor and can face up to six months in jail, a fine up to $1,000, or both. The law doesn't prevent deals requiring a certain number of copies of the same edition to be bought. This rule doesn't apply to contracts involving newspapers of general circulation. The term 'person' here includes businesses like corporations or partnerships.

Every person who, as a condition to a sale or consignment of any magazine, book, or other publication, requires that the purchaser or consignee purchase or receive for sale any other magazine, book, or other publication is guilty of a misdemeanor, punishable by imprisonment in the county jail not exceeding six months, or by fine not exceeding one thousand dollars ($1,000), or by both such imprisonment and such fine.
This section is not intended to prohibit an agreement requiring a person to purchase or accept on consignment a minimum number of copies of a single edition or issue of a magazine or of a particular book or other particular publication.
As used in this section, “person” includes a corporation, partnership, or other association.
This section does not apply with respect to any contract relating exclusively to the sale or consignment of any newspaper of general circulation as defined by Section 6000 of the Government Code.

Section § 16605

Explanation

If a distributor delivers books, magazines, or any publications to a retail dealer that weren’t specifically requested by the dealer, the distributor must pick them up within 10 days if the dealer says they don't want them within 48 hours of receiving them. If a distributor refuses to do business with a dealer because the dealer used these rights, the distributor can be charged with a misdemeanor. 'Person' here means any individual or business entity like a corporation or partnership.

Every person engaged in the business of distribution of books, magazines or publications of any kind to retail dealers shall remove from the possession of a retail dealer, within 10 days after notification by the dealer, any material which he delivered to the dealer which the dealer did not specifically request, if such dealer notifies such person that he does not want the material within 48 hours of receipt of the material.
Any person who refuses to transact business with a dealer because of any action taken by the dealer under this section is guilty of a misdemeanor.
As used in this section “person” includes a corporation, partnership or other association.

Section § 16606

Explanation

This law says that the customer list of a telephone answering service, which includes names and addresses, is considered a trade secret. This information is confidential and belongs to the owner of the service.

The customer list, including the names, addresses, and identity of customers, of a telephone answering service shall constitute a trade secret and confidential information of, and shall belong to, the owner of the telephone answering service.

Section § 16607

Explanation

This law says that an employment agency's customer lists, which include names and contact details of clients and job applicants, are considered confidential trade secrets. However, a former employee can legally use that customer list if they start their own employment agency at least one year after leaving their previous job.

(a)CA Business & Professions Code § 16607(a) Except as provided in subdivision (b), the customer list, including the names, addresses and identity of all employer customers who have listed job orders with an employment agency within a period of 180 days prior to the separation of an employee from the agency and including the names, addresses and identity of all applicant customers of the employment agency, shall constitute a trade secret and confidential information of, and shall belong to, the employment agency.
(b)CA Business & Professions Code § 16607(b) Notwithstanding the provisions of subdivision (a), no liability shall attach to, and no cause of action shall arise from, the use of a customer list of an employment agency by a former employee who enters into business as an employment agency more than one year immediately following termination of his employment.