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California Non-Disclosure Agreement
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California at a glance: Non-Compete NDAs: Generally void under Cal. Bus. & Prof. Code § 16600 · Trade Secret Protection: California Uniform Trade Secrets Act (CUTSA) · Employee NDAs: Enforceable for true trade secrets only
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Overview
Non-Disclosure Agreements in California
California has some of the most employee-friendly NDA laws in the country. Under Cal. Bus. & Prof. Code § 16600, any contract that restrains a person from engaging in a lawful profession, trade, or business is void — with very narrow exceptions. This means that NDAs cannot prevent employees from working for competitors after employment ends.
California does protect true trade secrets under the California Uniform Trade Secrets Act (CUTSA), but employers cannot use NDAs to prevent employees from using general skills and knowledge gained during employment.
Key Facts
California Non-Disclosure Agreement — Quick Reference
| Requirement | California Rule |
|---|---|
| Non-Compete NDAs | Generally void under Cal. Bus. & Prof. Code § 16600 |
| Trade Secret Protection | California Uniform Trade Secrets Act (CUTSA) |
| Employee NDAs | Enforceable for true trade secrets only |
| Governing Statute | Cal. Civ. Code § 3426 et seq. |
| Sexual Harassment NDAs | Restricted under SB 331 (2022) |
Legal Requirements
California Legal Requirements
- NDAs cannot prohibit employees from working for competitors after leaving — only true trade secrets may be protected.
- NDAs cannot prevent employees from discussing working conditions, wages, or potential legal violations.
- SB 331 prohibits NDAs that prevent disclosure of sexual harassment, assault, or discrimination in settlement agreements.
- Trade secrets must meet the CUTSA definition: information with independent economic value kept reasonably secret.
Governing Laws
California Governing Laws
Cal. Bus. & Prof. Code § 16600
Non-Compete Restrictions
Makes void any contract that restrains a person from engaging in a lawful profession, trade, or business — effectively banning non-compete agreements in California.
Cal. Civ. Code § 3426
California Uniform Trade Secrets Act
Defines trade secrets and provides remedies for misappropriation, including injunctive relief and damages.
Read the full text of these laws at Cornell Law School's California legal resources or your state legislature's official website.
Questions & Answers
California Non-Disclosure Agreement — Frequently Asked Questions
Are NDAs enforceable in California?
Yes, but with significant limitations. California NDAs can protect genuine trade secrets but cannot prevent employees from working for competitors after employment ends. Courts closely scrutinize overly broad NDAs.
Can a California employer require an NDA as a condition of employment?
Yes, employers can require NDAs to protect trade secrets. However, they cannot require employees to sign agreements that prevent disclosure of wages, working conditions, or potential legal violations.
Does California ban non-disclosure agreements in sexual harassment cases?
Under SB 331, California restricts NDAs in settlement agreements involving claims of sexual harassment, assault, or discrimination. Claimants can still choose to keep settlements confidential, but employers cannot require it.