California NDA Law: What Makes It Different From Every Other State

California is the most employee-friendly and startup-hostile jurisdiction for NDAs in the United States. If you are doing business in Silicon Valley, Los Angeles, or anywhere in California, you need to understand how your NDA will be enforced — because California courts will actively rewrite or invalidate clauses that they deem overly broad, even if both parties signed them willingly.

The Non-Compete Problem: California Business & Professions Code § 16600

California Business & Professions Code § 16600 states 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 means that non-compete agreements are essentially unenforceable in California, even between sophisticated parties with legal counsel. Any NDA clause that attempts to restrict an employee from working for a competitor after leaving is void under California law.

This is a critical distinction from most other states. In New York or Texas, non-competes are valid if reasonable in scope. In California, they are void regardless of how reasonable they appear.

What California NDAs Can Still Protect

While non-competes are void, California NDAs can still effectively protect: trade secrets (defined under CUTSA), proprietary technology and source code, client lists (if they represent genuine confidential information and not merely publicly available data), product roadmaps and unreleased features, and financial projections and internal business data.

California Uniform Trade Secrets Act (CUTSA)

CUTSA provides California businesses with robust protection for trade secrets, even without an NDA. Under CUTSA, misappropriation of a trade secret can result in injunctive relief, damages, and attorney's fees. However, CUTSA also preempts other state law claims — meaning you cannot sue for theft of information using contract law if CUTSA doesn't also apply. Understanding this preemption is essential when drafting your NDA's remedies section.

Recent Legislative Changes: AB 2288 (2024)

California Assembly Bill 2288, effective January 2024, strengthened restrictions on NDAs related to sexual harassment and workplace misconduct. Under this law, NDAs that prevent victims from disclosing their experience to law enforcement, legal counsel, or government agencies are void and unenforceable. If your NDA is used in an employment context, it must include a specific carve-out for these protected disclosures.