What is California Labor Code §2870 and does it protect my side projects?

California Labor Code §2870 prohibits employers from requiring assignment of inventions you develop entirely on your own time, without employer equipment, facilities, or trade secrets, that don't relate to the employer's business or reasonably anticipated research. It protects clearly independent projects in domains unrelated to your employer. However, for tech company employees, "related to employer's business" often covers a broad range of software and technology — so the protection's scope depends on facts.

Can I move from one tech company to a competitor in California without legal concern?

California's non-compete protections mean you can generally join a competitor without violating a non-compete clause. However, you cannot bring trade secrets or confidential information from your former employer, and non-solicitation clauses (though in legal gray area in California) may limit recruiting former colleagues. The Defend Trade Secrets Act and California's Uniform Trade Secrets Act also apply, so the transition requires care about what information you use at the new role.

Is mandatory arbitration enforceable in California employment agreements?

Yes, in most cases. California passed AB 51 attempting to limit mandatory arbitration, but federal courts have ruled that the Federal Arbitration Act (FAA) preempts California's restriction. As a result, mandatory arbitration clauses in employment agreements are generally enforceable in California under federal law. California courts have carved out some exceptions, but you cannot generally refuse to arbitrate solely because you're in California.

Does California law protect employees from signing bonus clawbacks?

California law doesn't specifically prohibit signing bonus clawback provisions, but California's wage payment laws may affect how clawbacks are structured. California requires prompt payment of wages earned, and some clawback structures have been challenged as unlawful wage deductions. The enforceability of a specific clawback depends on how it's structured. This is an area worth reviewing if you're accepting a large signing bonus.

California Employment Agreement Guide

Key Issues to Review

Non-Compete Unenforceability (§16600)

Common

California Business & Professions Code §16600 provides that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." This is one of the broadest employee protections against non-competes in the US. California courts have consistently struck down non-compete clauses — even those in agreements governed by another state's law.

IP Assignment Carve-Out (Labor Code §2870)

Notable

California Labor Code §2870 prohibits employers from requiring assignment of inventions you develop entirely on your own time, without employer resources, that don't relate to the employer's business. If your agreement doesn't reference §2870 or include equivalent language, that doesn't eliminate your rights — the statute applies regardless.

Trade Secret Protections Still Apply

Notable

While non-competes are unenforceable, California's Uniform Trade Secrets Act (UTSA) and the federal Defend Trade Secrets Act (DTSA) still protect employer trade secrets. Moving to a competitor doesn't give you license to take or use confidential information. The line between what you "know" and what constitutes a trade secret matters.

Choice of Law Clauses

Notable

Employers based in other states may include a choice-of-law clause specifying that another state's law governs the agreement. California courts have generally refused to enforce out-of-state non-competes against California-based employees, but the choice-of-law provision can complicate arbitration proceedings and forum selection.

AB 2188: Recreational Marijuana Testing

Common

California AB 2188 (effective January 2024) prohibits employers from discriminating against employees for off-duty recreational marijuana use, with limited exceptions. If your employment agreement contains drug testing provisions, understand what they require.

What to Look For

California provides the strongest employee protections against restrictive covenants in the United States — significantly stronger than most other states. If you're accepting an employment agreement in California, understanding what the law provides (and doesn't provide) shapes how to read every restrictive provision in your agreement.

Non-compete clauses are void — but the rest of the agreement is not. California Business & Professions Code §16600 renders non-compete clauses void and unenforceable. This means that even if your agreement contains a non-compete provision, a California court won't enforce it against you. California courts have extended this protection to California employees even when the agreement specifies that another state's law governs. However, the rest of your agreement — confidentiality, IP assignment, non-solicitation — is not automatically voided by §16600.

California's IP assignment protection has limits. Labor Code §2870 protects your right to inventions developed on your own time, without company resources, that don't relate to the employer's current or anticipated business. This is powerful — but "relate to the employer's business" is the operative constraint. If you work for a tech company and your side project is in a domain the company operates in, the protection may not fully apply. Before joining, document all prior inventions and independent projects in writing.

Non-solicitation clauses are in a gray area. Unlike non-competes, non-solicitation clauses (restricting you from recruiting former colleagues) occupy legal uncertainty in California. The California Supreme Court's 2022 decision in Ixchel Pharma v. Biogen narrowed non-solicitation enforceability, but the law is not settled. Some versions of non-solicitation provisions have been struck down by California courts; others have been enforced. Don't assume your non-solicitation clause is automatically unenforceable just because you're in California.

Arbitration clauses present a state-federal conflict. California has attempted to limit mandatory arbitration (AB 51), but federal courts have largely ruled that the Federal Arbitration Act (FAA) preempts California's restrictions. As a result, mandatory arbitration clauses in California employment agreements are generally enforceable under federal law. You likely cannot refuse to arbitrate simply because you're in California.

Trade secrets are separately protected. Even with California's employee-protective laws, trade secret law applies. If you leave a California employer for a competitor, be careful about what information you bring, use, or discuss. The line between general skills and knowledge (yours to keep) versus trade secrets (employer-protected) is fact-specific but important.

Frequently Asked Questions

Generally no. California Business & Professions Code §16600 makes non-compete agreements void and unenforceable. California courts have struck down non-competes even when the employer's agreement specifies that another state's law governs, if you're working in California. Effective January 2024 (SB 699), California also made it illegal for employers to even require employees to sign non-compete agreements.

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This guide is for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by reading this page. Consult a qualified employment attorney for advice specific to your situation.