Employment Contract Disputes in California
Employment relationships in California are governed by a complex web of state statutes, common law principles, and contractual agreements. When disputes arise over the terms, enforcement, or breach of an employment contract, having an experienced California employment attorney on your side can make the difference between protecting your livelihood and suffering significant financial and professional harm.
At Bluestone Law, our Los Angeles employment attorneys represent both employees and business professionals in employment contract disputes throughout California. Whether you are an executive negotiating an employment agreement, a departing employee reviewing a separation package, or a business owner navigating a dispute with a former partner or key employee, our attorneys provide the strategic counsel you need.
Key Takeaways
- Non-compete agreements are void and unenforceable in California under Business and Professions Code section 16600, with very narrow exceptions for the sale of a business.
- California severance agreements are negotiable, and an employer's initial offer is rarely the best they are willing to pay, especially when the employee has potential legal claims.
- Under SB 699 and AB 1076, California employers cannot attempt to enforce void non-compete clauses and must notify employees that such clauses are unenforceable.
- California courts generally interpret ambiguities in employment contracts in favor of the employee.
- The Silenced No More Act (SB 331) prohibits employers from including non-disparagement clauses in severance agreements that prevent discussion of workplace harassment or discrimination.
Types of Employment Contract Issues
Employment contracts in California can take many forms — from formal written agreements to implied contracts based on employer handbooks, policies, and conduct. Common contract disputes we handle include:
- Breach of employment agreement — when an employer fails to honor the terms of a written contract regarding compensation, benefits, position, or duration of employment
- Commission and bonus disputes — disagreements over the calculation, timing, or payment of commissions and incentive compensation
- Equity and stock option disputes — conflicts involving the vesting, exercise, or forfeiture of equity compensation
- Trade secret and confidentiality agreements — disputes over the scope and enforcement of non-disclosure agreements and trade secret protections
- Partnership and ownership disputes — conflicts between business partners or co-owners that involve employment-related issues
California courts generally interpret ambiguities in employment contracts in favor of the employee. Our attorneys leverage this principle and our deep understanding of California employment law to advocate effectively for clients across Los Angeles and throughout Southern California.
Severance Agreement Review and Negotiation
A severance agreement is a legally binding contract in which an employee agrees to release legal claims against the employer in exchange for compensation, and it is critical to have an experienced attorney review the agreement before you sign. Severance agreements almost always include provisions that significantly affect your legal rights, and employers draft these documents to protect their own interests — not yours.
What Should You Look for in a Severance Agreement?
A typical California severance agreement may include:
- Release of claims — a provision requiring you to give up your right to sue the employer for any and all claims, including discrimination, harassment, and wage violations
- Non-disparagement clauses — restrictions on what you can say publicly about your former employer. Note that under California's Silenced No More Act (SB 331), employers cannot include non-disparagement clauses that prevent you from discussing workplace harassment, discrimination, or other unlawful conduct.
- Confidentiality provisions — requirements to keep the terms of the agreement secret
- Non-solicitation clauses — restrictions on contacting former colleagues or clients
- Cooperation clauses — obligations to assist the employer in future litigation or investigations
- Return of property and information — requirements to return all company materials and certify that no copies were retained
Many employees do not realize that severance agreements are negotiable. An employer's initial offer is rarely the best they are willing to pay, especially if you have potential legal claims. Our attorneys routinely negotiate severance packages that significantly exceed the employer's opening offer by identifying leverage points and articulating the value of the claims being released.
When Should You Consult an Attorney About a Severance Agreement?
You should consult with a California employment attorney about your severance agreement if:
- You believe your termination was discriminatory, retaliatory, or otherwise unlawful
- You are being asked to release claims you do not fully understand
- The severance amount seems low relative to your tenure, position, or potential claims
- You are over 40 years old (special rules apply under the Older Workers Benefit Protection Act)
- The agreement contains non-compete, non-solicitation, or other restrictive covenants
Non-Compete Agreements Are Void in California
Under Business and Professions Code section 16600, non-compete agreements are void and unenforceable in California. Any contract that restrains a person from engaging in a lawful profession, trade, or business is void — with very narrow exceptions for the sale of a business.
This means that if you signed a non-compete agreement with your California employer, that agreement is almost certainly unenforceable. You generally have the right to work for a competitor, start a competing business, or solicit clients in your industry after leaving your employer.
How Did SB 699 and AB 1076 Strengthen California's Non-Compete Ban?
In 2023, California enacted SB 699 and AB 1076, which made California's ban on non-compete agreements among the strongest in the nation. These laws:
- Make it unlawful for an employer to even attempt to enforce a void non-compete agreement
- Require employers to notify current and former employees that any non-compete clauses in their contracts are void
- Apply to non-compete agreements signed in other states if the employee works primarily in California
- Allow employees to sue employers who violate these provisions and recover attorney fees and damages
If your former employer is threatening to enforce a non-compete agreement against you in California, or if a prospective employer is requiring you to sign one as a condition of employment, contact our attorneys immediately. We can help you understand your rights and take action to protect your career.
Are Trade Secrets Still Protected in California?
While non-compete agreements are void in California, employers retain the right to protect their trade secrets under the California Uniform Trade Secrets Act (Civil Code sections 3426 through 3426.11). Trade secrets include proprietary formulas, customer lists, manufacturing processes, and other confidential business information that derives independent economic value from not being generally known.
The line between an unenforceable non-compete and a legitimate trade secret claim can be blurry. Our attorneys help clients on both sides of this issue — whether you are a departing employee accused of misappropriating trade secrets or a business seeking to protect its confidential information.
Protecting Your Business Interests
Bluestone Law also represents professionals and business owners in the Los Angeles area who need strategic legal guidance on employment-related matters. We assist with:
- Drafting and reviewing employment agreements that comply with California law and protect your legitimate interests
- Advising on executive compensation packages, including equity arrangements, deferred compensation, and golden parachute provisions
- Negotiating partnership and operating agreements that clearly define the rights and obligations of all parties
- Resolving disputes through negotiation or litigation when business relationships break down
California employment law is constantly evolving, and what may be enforceable in other states is often void here. Our attorneys stay current on every legislative change and court decision that could affect your business or career.
Frequently Asked Questions
Are non-compete agreements enforceable in California?
No, non-compete agreements are void and unenforceable in California under Business and Professions Code section 16600. Since 2023, under SB 699 and AB 1076, it is also unlawful for employers to even attempt to enforce a non-compete clause, and employers must notify current and former employees that such clauses are void. The only narrow exception is in connection with the sale of a business.
Should I have a lawyer review my severance agreement?
Yes, you should always have an experienced California employment attorney review your severance agreement before signing. Severance agreements typically require you to release all legal claims against the employer, including claims for discrimination, harassment, and unpaid wages. An attorney can identify leverage to negotiate a significantly higher severance amount and ensure that unlawful provisions, such as prohibited non-disparagement clauses, are removed.
Can my employer enforce a non-compete I signed in another state?
If you work primarily in California, a non-compete agreement signed in another state is unenforceable under California law. SB 699, which took effect in 2024, explicitly applies California's non-compete ban to out-of-state agreements when the employee is based in California. Your former employer cannot prevent you from working for a competitor or starting a competing business in California.
What is the difference between a non-compete and a trade secret agreement?
A non-compete agreement broadly restricts where and for whom you can work after leaving an employer, and it is void in California. A trade secret agreement, by contrast, protects specific confidential business information such as proprietary formulas, customer lists, or manufacturing processes under the California Uniform Trade Secrets Act. Trade secret agreements are enforceable in California when they protect genuinely confidential information, but they cannot be used as a disguised non-compete.
Can my employer prevent me from talking about workplace harassment in a severance agreement?
No, under California's Silenced No More Act (SB 331), employers cannot include non-disparagement or confidentiality provisions in severance agreements that prevent employees from discussing workplace harassment, discrimination, or other unlawful conduct. Any such provision is void and unenforceable. This law applies to all California separation agreements executed on or after January 1, 2022.
Whether you need help negotiating an employment contract, reviewing a severance agreement, or resolving a business dispute, Bluestone Law is here to help. Contact us today for a free consultation. Call (310) 363-0975 or reach out online. Our California employment attorneys will provide clear, honest advice about your options and help you chart the best path forward.