Noncompete agreements are widespread, affecting an estimated 20-25% of the nation’s labor force
OAKLAND – California Attorney General Rob Bonta today issued an alert reminding employers and workers that noncompete agreements are not enforceable in California. Noncompete agreements generally require workers to refrain from accepting new employment opportunities in a similar line of work or establishing a competing business, usually for a specified period of time and within a geographic area. Although frequently found in high paying, highly technical jobs, these provisions are also found in lower-paying, less technical jobs and can have an adverse impact on labor market mobility and worker compensation. For example, a 2019 study estimates that 53% of noncompete workers are non-salaried, hourly wage employees, 14% of whom earn less than $40,000 a year. Attorney General Bonta reminds both employers and employees that noncompete agreements are prohibited in the state of California, and urges individuals who are wrongfully presented with a noncompete agreement to know their rights.
“Despite being prohibited in California, noncompete provisions are routinely included in employee contracts, including contracts for lower-wage workers. This can have a tremendous effect of deterring workers from pursuing new, and oftentimes better job opportunities,” said Attorney General Bonta. “As our economy recovers, it is more important than ever for employers and workers in our state to have a system that protects competition in the labor market. Today’s alert is a reminder that noncompete agreements have no place in California.”
California law prohibits employers, including those who operate out of state but employ California residents, from enforcing noncompete agreements. Even when invalid, these agreements can discourage workers from seeking new opportunities, causing workers in a variety of professions to mistakenly believe that they cannot pursue or accept a competitor’s offer of better pay or working conditions in fear of facing legal repercussions. From software engineers to baristas, those in noncompete agreements may believe that their only option is to continue to work for their current employer. These anticompetitive provisions also harm the economy by depriving businesses of the opportunity to hire workers who may otherwise be available or qualified. Noncompete agreements also prove to be harmful to wages, entrepreneurship, market concentration in the labor force, and equality amongst the workforce.
Noncompete agreements are often buried in fine print and go unmentioned in discussions between workers and employers. Even worse, they are sometimes added to the terms of employment after a worker has accepted a job, or even after they have begun work. Workers who have been wrongly presented with, or have entered into a noncompete agreement should report it immediately to the Attorney General’s office at oag.ca.gov/report.
Attorney General Bonta is committed to defending workers' rights, workplace safety, and a fair and competitive labor market in California. Through both the Worker Rights and Fair Labor Section and the Antitrust Law Section, Attorney General Bonta enforces California’s laws to protect the welfare of California workers and maintain a level playing field for legitimate businesses operating in the state. Last month, he filed an amicus brief urging the National Labor Relations Board to strengthen protections for workers seeking to organize in a case before the Board. In January, he submitted a comment letter calling on the federal Occupational Safety and Health Administration to quickly implement a national standard to protect workers from heat-related injury and illness. That same month, he appealed the dismissal of a lawsuit challenging Facebook’s illegal, anticompetitive behavior. In September 2021, he filed a lawsuit against American Airlines and JetBlue challenging an anticompetitive joint venture between the companies known as the Northeast Alliance.